Correlation Between Pieris Pharmaceuticals and Seres Therapeutics

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

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

Diversification Opportunities for Pieris Pharmaceuticals and Seres Therapeutics

0.3

Correlation Coefficient

Pieris Pharmaceuticals  Seres Therapeutics

Weak diversification

The 3 months correlation between Pieris and Seres is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding Pieris Pharmaceuticals and Seres Therapeutics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Seres Therapeutics and Pieris 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 Pieris Pharmaceuticals are associated (or correlated) with Seres Therapeutics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Seres Therapeutics has no effect on the direction of Pieris Pharmaceuticals i.e., Pieris Pharmaceuticals and Seres Therapeutics go up and down completely randomly.

Pair Corralation between Pieris Pharmaceuticals and Seres Therapeutics

Given the investment horizon of 90 days Pieris Pharmaceuticals is expected to under-perform the Seres Therapeutics. But the stock apears to be less risky and, when comparing its historical volatility, Pieris Pharmaceuticals is 1.91 times less risky than Seres Therapeutics. The stock trades about -0.13 of its potential returns per unit of risk. The Seres Therapeutics is currently generating about 0.34 of returns per unit of risk over similar time horizon. If you would invest  58.00  in Seres Therapeutics on September 17, 2024 and sell it today you would earn a total of  36.84  from holding Seres Therapeutics or generate 63.52% return on investment over 90 days.

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

Pieris Pharmaceuticals  vs.  Seres Therapeutics

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.

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 latest uncertain performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with Pieris Pharmaceuticals and Seres Therapeutics

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

The idea behind Pieris Pharmaceuticals and Seres Therapeutics 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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.