Correlation Between RAPT Therapeutics and Stoke Therapeutics

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

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

Diversification Opportunities for RAPT Therapeutics and Stoke Therapeutics

0.32

Correlation Coefficient

RAPT Therapeutics  Stoke Therapeutics

Weak diversification

The 3 months correlation between RAPT and Stoke is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding RAPT Therapeutics and Stoke Therapeutics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Stoke Therapeutics and RAPT 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 RAPT Therapeutics are associated (or correlated) with Stoke Therapeutics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Stoke Therapeutics has no effect on the direction of RAPT Therapeutics i.e., RAPT Therapeutics and Stoke Therapeutics go up and down completely randomly.

Pair Corralation between RAPT Therapeutics and Stoke Therapeutics

Given the investment horizon of 90 days RAPT Therapeutics is expected to under-perform the Stoke Therapeutics. In addition to that, RAPT Therapeutics is 1.52 times more volatile than Stoke Therapeutics. It trades about -0.27 of its total potential returns per unit of risk. Stoke Therapeutics is currently generating about -0.02 per unit of volatility. If you would invest  1,381  in Stoke Therapeutics on September 12, 2024 and sell it today you would lose (55.00) from holding Stoke Therapeutics or give up 3.98% of portfolio value over 90 days.

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

RAPT Therapeutics  vs.  Stoke Therapeutics

RAPT Therapeutics

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days RAPT Therapeutics 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.

Stoke Therapeutics

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Stoke Therapeutics has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent basic indicators, Stoke Therapeutics is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with RAPT Therapeutics and Stoke Therapeutics

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

The idea behind RAPT Therapeutics and Stoke 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.