Correlation Between Seres Therapeutics and Pieris Pharmaceuticals

Can any of the company-specific risk be diversified away by investing in both Seres Therapeutics and Pieris Pharmaceuticals 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 Pieris Pharmaceuticals into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Seres Therapeutics and Pieris Pharmaceuticals, you can compare the effects of market volatilities on Seres Therapeutics and Pieris Pharmaceuticals 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 Pieris Pharmaceuticals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Seres Therapeutics and Pieris Pharmaceuticals.

Diversification Opportunities for Seres Therapeutics and Pieris Pharmaceuticals

0.25

Correlation Coefficient

Seres Therapeutics  Pieris Pharmaceuticals

Modest diversification

The 3 months correlation between Seres and Pieris is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding Seres Therapeutics and Pieris Pharmaceuticals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pieris Pharmaceuticals 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 Pieris Pharmaceuticals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pieris Pharmaceuticals has no effect on the direction of Seres Therapeutics i.e., Seres Therapeutics and Pieris Pharmaceuticals go up and down completely randomly.

Pair Corralation between Seres Therapeutics and Pieris Pharmaceuticals

Given the investment horizon of 90 days Seres Therapeutics is expected to generate 2.35 times more return on investment than Pieris Pharmaceuticals. However, Seres Therapeutics is 2.35 times more volatile than Pieris Pharmaceuticals. It trades about -0.01 of its potential returns per unit of risk. Pieris Pharmaceuticals is currently generating about -0.08 per unit of risk. If you would invest  105.00  in Seres Therapeutics on September 18, 2024 and sell it today you would lose (16.00) from holding Seres Therapeutics or give up 15.24% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Seres Therapeutics  vs.  Pieris Pharmaceuticals

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.

Pieris Pharmaceuticals

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Pieris Pharmaceuticals has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Seres Therapeutics and Pieris Pharmaceuticals

The main advantage of trading using opposite Seres Therapeutics and Pieris Pharmaceuticals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Seres Therapeutics position performs unexpectedly, Pieris Pharmaceuticals 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 Pieris Pharmaceuticals will offset losses from the drop in Pieris Pharmaceuticals' long position.

The idea behind Seres Therapeutics and Pieris Pharmaceuticals 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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.