Correlation Between Sera Prognostics and Twist Bioscience

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

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

Diversification Opportunities for Sera Prognostics and Twist Bioscience

0.39

Correlation Coefficient

Sera Prognostics  Twist Bioscience

Weak diversification

The 3 months correlation between Sera and Twist is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding Sera Prognostics and Twist Bioscience Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Twist Bioscience Corp and Sera Prognostics 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 Sera Prognostics are associated (or correlated) with Twist Bioscience. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Twist Bioscience Corp has no effect on the direction of Sera Prognostics i.e., Sera Prognostics and Twist Bioscience go up and down completely randomly.

Pair Corralation between Sera Prognostics and Twist Bioscience

Given the investment horizon of 90 days Sera Prognostics is expected to generate 1.44 times more return on investment than Twist Bioscience. However, Sera Prognostics is 1.44 times more volatile than Twist Bioscience Corp. It trades about 0.02 of its potential returns per unit of risk. Twist Bioscience Corp is currently generating about -0.01 per unit of risk. If you would invest  716.00  in Sera Prognostics on October 12, 2024 and sell it today you would lose (23.00) from holding Sera Prognostics or give up 3.21% of portfolio value over 90 days.

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

Sera Prognostics  vs.  Twist Bioscience Corp

Sera Prognostics

Risk-Adjusted Performance

1 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Sera Prognostics are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Sera Prognostics may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Twist Bioscience Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Twist Bioscience Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Twist Bioscience is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Sera Prognostics and Twist Bioscience

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

The idea behind Sera Prognostics and Twist Bioscience Corp 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.