Correlation Between Phathom Pharmaceuticals and Mirum Pharmaceuticals

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

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

Diversification Opportunities for Phathom Pharmaceuticals and Mirum Pharmaceuticals

-0.38

Correlation Coefficient

Phathom Pharmaceuticals  Mirum Pharmaceuticals

Very good diversification

The 3 months correlation between Phathom and Mirum is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding Phathom Pharmaceuticals and Mirum Pharmaceuticals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mirum Pharmaceuticals 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 Mirum Pharmaceuticals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mirum Pharmaceuticals has no effect on the direction of Phathom Pharmaceuticals i.e., Phathom Pharmaceuticals and Mirum Pharmaceuticals go up and down completely randomly.

Pair Corralation between Phathom Pharmaceuticals and Mirum Pharmaceuticals

Given the investment horizon of 90 days Phathom Pharmaceuticals is expected to under-perform the Mirum Pharmaceuticals. In addition to that, Phathom Pharmaceuticals is 2.33 times more volatile than Mirum Pharmaceuticals. It trades about -0.04 of its total potential returns per unit of risk. Mirum Pharmaceuticals is currently generating about 0.09 per unit of volatility. If you would invest  4,203  in Mirum Pharmaceuticals on December 25, 2024 and sell it today you would earn a total of  503.00  from holding Mirum Pharmaceuticals or generate 11.97% return on investment over 90 days.

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

Phathom Pharmaceuticals  vs.  Mirum Pharmaceuticals

Phathom Pharmaceuticals

Risk-Adjusted Performance

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 unfluctuating performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in April 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Mirum Pharmaceuticals

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Mirum Pharmaceuticals are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of very weak basic indicators, Mirum Pharmaceuticals displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Phathom Pharmaceuticals and Mirum Pharmaceuticals

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

The idea behind Phathom Pharmaceuticals and Mirum 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.

Check out your portfolio center.

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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.