Correlation Between Summit Therapeutics and Burning Rock

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

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

Diversification Opportunities for Summit Therapeutics and Burning Rock

0.16

Correlation Coefficient

Summit Therapeutics  Burning Rock

Average diversification

The 3 months correlation between Summit and Burning is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding Summit Therapeutics PLC and Burning Rock Biotech in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Burning Rock Biotech and Summit Therapeutics 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 Summit Therapeutics PLC are associated (or correlated) with Burning Rock. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Burning Rock Biotech has no effect on the direction of Summit Therapeutics i.e., Summit Therapeutics and Burning Rock go up and down completely randomly.

Pair Corralation between Summit Therapeutics and Burning Rock

Given the investment horizon of 90 days Summit Therapeutics PLC is expected to generate 1.0 times more return on investment than Burning Rock. However, Summit Therapeutics PLC is 1.0 times less risky than Burning Rock. It trades about 0.07 of its potential returns per unit of risk. Burning Rock Biotech is currently generating about -0.1 per unit of risk. If you would invest  1,789  in Summit Therapeutics PLC on December 28, 2024 and sell it today you would earn a total of  243.00  from holding Summit Therapeutics PLC or generate 13.58% return on investment over 90 days.

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

Summit Therapeutics PLC  vs.  Burning Rock Biotech

Summit Therapeutics PLC

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Summit Therapeutics PLC are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unfluctuating primary indicators, Summit Therapeutics unveiled solid returns over the last few months and may actually be approaching a breakup point.

Burning Rock Biotech

Risk-Adjusted Performance

Very Weak

Over the last 90 days Burning Rock Biotech has generated negative risk-adjusted returns adding no value to investors with long positions. Even with weak performance in the last few months, the Stock's basic indicators remain relatively invariable which may send shares a bit higher in April 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Pair Trading with Summit Therapeutics and Burning Rock

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

The idea behind Summit Therapeutics PLC and Burning Rock Biotech 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.