Correlation Between Replimune and Phathom Pharmaceuticals

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

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

Diversification Opportunities for Replimune and Phathom Pharmaceuticals

-0.54

Correlation Coefficient

Replimune  Phathom Pharmaceuticals

Excellent diversification

The 3 months correlation between Replimune and Phathom is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding Replimune Group and Phathom Pharmaceuticals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Phathom Pharmaceuticals and Replimune 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 Replimune Group are associated (or correlated) with Phathom Pharmaceuticals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Phathom Pharmaceuticals has no effect on the direction of Replimune i.e., Replimune and Phathom Pharmaceuticals go up and down completely randomly.

Pair Corralation between Replimune and Phathom Pharmaceuticals

Given the investment horizon of 90 days Replimune Group is expected to generate 0.97 times more return on investment than Phathom Pharmaceuticals. However, Replimune Group is 1.03 times less risky than Phathom Pharmaceuticals. It trades about 0.08 of its potential returns per unit of risk. Phathom Pharmaceuticals is currently generating about -0.14 per unit of risk. If you would invest  1,053  in Replimune Group on September 9, 2024 and sell it today you would earn a total of  255.00  from holding Replimune Group or generate 24.22% return on investment over 90 days.

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

Replimune Group  vs.  Phathom Pharmaceuticals

Replimune Group

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Replimune Group are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting basic indicators, Replimune disclosed solid returns over the last few months and may actually be approaching a breakup point.

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 unfluctuating 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.

Pair Trading with Replimune and Phathom Pharmaceuticals

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

The idea behind Replimune Group and Phathom 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.

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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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.