Correlation Between Prometheus Biosciences and Phathom Pharmaceuticals

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

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

Diversification Opportunities for Prometheus Biosciences and Phathom Pharmaceuticals

0.0

Correlation Coefficient

Prometheus Biosciences  Phathom Pharmaceuticals

Pay attention - limited upside

The 3 months correlation between Prometheus and Phathom is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Prometheus Biosciences and Phathom Pharmaceuticals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Phathom Pharmaceuticals 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 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 Prometheus Biosciences i.e., Prometheus Biosciences and Phathom Pharmaceuticals go up and down completely randomly.

Pair Corralation between Prometheus Biosciences and Phathom Pharmaceuticals

If you would invest (100.00) in Prometheus Biosciences on December 30, 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.  Phathom Pharmaceuticals

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.

Phathom Pharmaceuticals

Risk-Adjusted Performance

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 latest unfluctuating performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with Prometheus Biosciences and Phathom Pharmaceuticals

The main advantage of trading using opposite Prometheus Biosciences and Phathom Pharmaceuticals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Prometheus Biosciences 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 Prometheus Biosciences 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.