Correlation Between Sight Sciences and Design Therapeutics

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

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

Diversification Opportunities for Sight Sciences and Design Therapeutics

-0.06

Correlation Coefficient

Sight Sciences  Design Therapeutics

Good diversification

The 3 months correlation between Sight and Design is -0.06. Overlapping area represents the amount of risk that can be diversified away by holding Sight Sciences and Design Therapeutics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Design Therapeutics and Sight Sciences 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 Sight Sciences are associated (or correlated) with Design Therapeutics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Design Therapeutics has no effect on the direction of Sight Sciences i.e., Sight Sciences and Design Therapeutics go up and down completely randomly.

Pair Corralation between Sight Sciences and Design Therapeutics

Given the investment horizon of 90 days Sight Sciences is expected to under-perform the Design Therapeutics. In addition to that, Sight Sciences is 1.14 times more volatile than Design Therapeutics. It trades about 0.0 of its total potential returns per unit of risk. Design Therapeutics is currently generating about 0.02 per unit of volatility. If you would invest  785.00  in Design Therapeutics on October 22, 2024 and sell it today you would lose (279.00) from holding Design Therapeutics or give up 35.54% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	99.8%
Values	Daily Returns

Sight Sciences  vs.  Design Therapeutics

Sight Sciences

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sight Sciences 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 technical indicators remain comparatively stable which may send shares a bit higher in February 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Design Therapeutics

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Sight Sciences and Design Therapeutics

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

The idea behind Sight Sciences and Design 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.