Correlation Between Protagonist Therapeutics and Solid Biosciences

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

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

Diversification Opportunities for Protagonist Therapeutics and Solid Biosciences

0.64

Correlation Coefficient

Protagonist Therapeutics  Solid Biosciences

Poor diversification

The 3 months correlation between Protagonist and Solid is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Protagonist Therapeutics and Solid Biosciences LLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Solid Biosciences LLC and Protagonist 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 Protagonist Therapeutics are associated (or correlated) with Solid Biosciences. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Solid Biosciences LLC has no effect on the direction of Protagonist Therapeutics i.e., Protagonist Therapeutics and Solid Biosciences go up and down completely randomly.

Pair Corralation between Protagonist Therapeutics and Solid Biosciences

Given the investment horizon of 90 days Protagonist Therapeutics is expected to generate 0.65 times more return on investment than Solid Biosciences. However, Protagonist Therapeutics is 1.54 times less risky than Solid Biosciences. It trades about 0.09 of its potential returns per unit of risk. Solid Biosciences LLC is currently generating about 0.02 per unit of risk. If you would invest  1,078  in Protagonist Therapeutics on September 23, 2024 and sell it today you would earn a total of  3,071  from holding Protagonist Therapeutics or generate 284.88% return on investment over 90 days.

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

Protagonist Therapeutics  vs.  Solid Biosciences LLC

Protagonist Therapeutics

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Protagonist Therapeutics has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unsteady performance, the Stock's technical and fundamental indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Solid Biosciences LLC

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Solid Biosciences LLC has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unsteady performance in the last few months, the Stock's fundamental indicators remain somewhat strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Protagonist Therapeutics and Solid Biosciences

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

The idea behind Protagonist Therapeutics and Solid Biosciences LLC 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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.