Correlation Between Phathom Pharmaceuticals and Structure Therapeutics

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

By analyzing existing cross correlation between Phathom Pharmaceuticals and Structure Therapeutics American, you can compare the effects of market volatilities on Phathom Pharmaceuticals and Structure Therapeutics 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 Phathom Pharmaceuticals with a short position of Structure Therapeutics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Phathom Pharmaceuticals and Structure Therapeutics.

Diversification Opportunities for Phathom Pharmaceuticals and Structure Therapeutics

0.77

Correlation Coefficient

Phathom Pharmaceuticals  Structure Therapeutics

Poor diversification

The 3 months correlation between Phathom and Structure is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Phathom Pharmaceuticals and Structure Therapeutics America in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Structure Therapeutics and Phathom Pharmaceuticals 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 Phathom Pharmaceuticals are associated (or correlated) with Structure Therapeutics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Structure Therapeutics has no effect on the direction of Phathom Pharmaceuticals i.e., Phathom Pharmaceuticals and Structure Therapeutics go up and down completely randomly.

Pair Corralation between Phathom Pharmaceuticals and Structure Therapeutics

Given the investment horizon of 90 days Phathom Pharmaceuticals is expected to under-perform the Structure Therapeutics. In addition to that, Phathom Pharmaceuticals is 1.89 times more volatile than Structure Therapeutics American. It trades about -0.35 of its total potential returns per unit of risk. Structure Therapeutics American is currently generating about -0.15 per unit of volatility. If you would invest  3,930  in Structure Therapeutics American on September 6, 2024 and sell it today you would lose (575.00) from holding Structure Therapeutics American or give up 14.63% of portfolio value over 90 days.

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

Phathom Pharmaceuticals  vs.  Structure Therapeutics America

Phathom Pharmaceuticals

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Phathom 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.

Structure Therapeutics

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Structure Therapeutics American has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable fundamental indicators, Structure Therapeutics is not utilizing all of its potentials. The recent stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Phathom Pharmaceuticals and Structure Therapeutics

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

The idea behind Phathom Pharmaceuticals and Structure Therapeutics American 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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.