Correlation Between Summit Therapeutics and Equillium
Can any of the company-specific risk be diversified away by investing in both Summit Therapeutics and Equillium 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 Equillium 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 Equillium, you can compare the effects of market volatilities on Summit Therapeutics and Equillium 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 Equillium. Check out your portfolio center. Please also check ongoing floating volatility patterns of Summit Therapeutics and Equillium.
Diversification Opportunities for Summit Therapeutics and Equillium
0.19 | Correlation Coefficient |
Average diversification
The 3 months correlation between Summit and Equillium is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding Summit Therapeutics PLC and Equillium in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Equillium 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 Equillium. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Equillium has no effect on the direction of Summit Therapeutics i.e., Summit Therapeutics and Equillium go up and down completely randomly.
Pair Corralation between Summit Therapeutics and Equillium
Given the investment horizon of 90 days Summit Therapeutics PLC is expected to under-perform the Equillium. But the stock apears to be less risky and, when comparing its historical volatility, Summit Therapeutics PLC is 1.51 times less risky than Equillium. The stock trades about -0.14 of its potential returns per unit of risk. The Equillium is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest 87.00 in Equillium on September 13, 2024 and sell it today you would lose (17.00) from holding Equillium or give up 19.54% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
Summit Therapeutics PLC vs. Equillium
Performance |
Timeline |
Summit Therapeutics PLC |
Equillium |
Summit Therapeutics and Equillium Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Summit Therapeutics and Equillium
The main advantage of trading using opposite Summit Therapeutics and Equillium positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Summit Therapeutics position performs unexpectedly, Equillium 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 Equillium will offset losses from the drop in Equillium's long position.Summit Therapeutics vs. Nkarta Inc | Summit Therapeutics vs. Cullinan Oncology LLC | Summit Therapeutics vs. Kezar Life Sciences | Summit Therapeutics vs. Kronos Bio |
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Check out your portfolio center.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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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