Correlation Between Seres Therapeutics and CTi Biopharma

Can any of the company-specific risk be diversified away by investing in both Seres Therapeutics and CTi Biopharma at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Seres Therapeutics and CTi Biopharma into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Seres Therapeutics and CTi Biopharma Corp, you can compare the effects of market volatilities on Seres Therapeutics and CTi Biopharma and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Seres Therapeutics with a short position of CTi Biopharma. Check out your portfolio center. Please also check ongoing floating volatility patterns of Seres Therapeutics and CTi Biopharma.

Diversification Opportunities for Seres Therapeutics and CTi Biopharma

-0.38

Correlation Coefficient

Seres Therapeutics  CTi Biopharma

Very good diversification

The 3 months correlation between Seres and CTi is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding Seres Therapeutics and CTi Biopharma Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CTi Biopharma Corp and Seres Therapeutics is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Seres Therapeutics are associated (or correlated) with CTi Biopharma. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CTi Biopharma Corp has no effect on the direction of Seres Therapeutics i.e., Seres Therapeutics and CTi Biopharma go up and down completely randomly.

Pair Corralation between Seres Therapeutics and CTi Biopharma

If you would invest  58.00  in Seres Therapeutics on September 18, 2024 and sell it today you would earn a total of  31.00  from holding Seres Therapeutics or generate 53.45% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	5.0%
Values	Daily Returns

Seres Therapeutics  vs.  CTi Biopharma Corp

Seres Therapeutics

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Seres Therapeutics has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Seres Therapeutics is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

CTi Biopharma Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days CTi Biopharma Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound forward indicators, CTi Biopharma is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Seres Therapeutics and CTi Biopharma

The main advantage of trading using opposite Seres Therapeutics and CTi Biopharma positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Seres Therapeutics position performs unexpectedly, CTi Biopharma can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in CTi Biopharma will offset losses from the drop in CTi Biopharma's long position.

The idea behind Seres Therapeutics and CTi Biopharma Corp pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.