Correlation Between Summit Therapeutics and Delek Logistics

Can any of the company-specific risk be diversified away by investing in both Summit Therapeutics and Delek Logistics 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 Delek Logistics 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 Delek Logistics Partners, you can compare the effects of market volatilities on Summit Therapeutics and Delek Logistics 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 Delek Logistics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Summit Therapeutics and Delek Logistics.

Diversification Opportunities for Summit Therapeutics and Delek Logistics

-0.54

Correlation Coefficient

Summit Therapeutics  Delek Logistics

Excellent diversification

The 3 months correlation between Summit and Delek is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding Summit Therapeutics PLC and Delek Logistics Partners in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Delek Logistics Partners 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 Delek Logistics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Delek Logistics Partners has no effect on the direction of Summit Therapeutics i.e., Summit Therapeutics and Delek Logistics go up and down completely randomly.

Pair Corralation between Summit Therapeutics and Delek Logistics

Given the investment horizon of 90 days Summit Therapeutics PLC is expected to generate 7.1 times more return on investment than Delek Logistics. However, Summit Therapeutics is 7.1 times more volatile than Delek Logistics Partners. It trades about 0.06 of its potential returns per unit of risk. Delek Logistics Partners is currently generating about 0.02 per unit of risk. If you would invest  439.00  in Summit Therapeutics PLC on October 11, 2024 and sell it today you would earn a total of  1,443  from holding Summit Therapeutics PLC or generate 328.7% return on investment over 90 days.

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

Summit Therapeutics PLC  vs.  Delek Logistics Partners

Summit Therapeutics PLC

Risk-Adjusted Performance

0 of 100

Weak

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

Delek Logistics Partners

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Delek Logistics Partners are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Despite quite inconsistent forward-looking signals, Delek Logistics may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Summit Therapeutics and Delek Logistics

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

The idea behind Summit Therapeutics PLC and Delek Logistics Partners 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..