Correlation Between Prometheus Biosciences and Agios Pharm

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

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

Diversification Opportunities for Prometheus Biosciences and Agios Pharm

0.0

Correlation Coefficient

Prometheus Biosciences  Agios Pharm

Pay attention - limited upside

The 3 months correlation between Prometheus and Agios is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Prometheus Biosciences and Agios Pharm in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Agios Pharm and Prometheus Biosciences 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 Prometheus Biosciences are associated (or correlated) with Agios Pharm. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Agios Pharm has no effect on the direction of Prometheus Biosciences i.e., Prometheus Biosciences and Agios Pharm go up and down completely randomly.

Pair Corralation between Prometheus Biosciences and Agios Pharm

If you would invest (100.00) in Prometheus Biosciences on December 29, 2024 and sell it today you would earn a total of  100.00  from holding Prometheus Biosciences or generate -100.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Prometheus Biosciences  vs.  Agios Pharm

Prometheus Biosciences

Risk-Adjusted Performance

Very Weak

Over the last 90 days Prometheus Biosciences has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong fundamental indicators, Prometheus Biosciences is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

Agios Pharm

Risk-Adjusted Performance

Very Weak

Over the last 90 days Agios Pharm has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy forward indicators, Agios Pharm is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Prometheus Biosciences and Agios Pharm

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

The idea behind Prometheus Biosciences and Agios Pharm 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.