Correlation Between Sarepta Therapeutics and GH Research

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

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

Diversification Opportunities for Sarepta Therapeutics and GH Research

-0.35

Correlation Coefficient

Sarepta Therapeutics  GH Research

Very good diversification

The 3 months correlation between Sarepta and GHRS is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding Sarepta Therapeutics and GH Research PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GH Research PLC and Sarepta 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 Sarepta Therapeutics are associated (or correlated) with GH Research. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GH Research PLC has no effect on the direction of Sarepta Therapeutics i.e., Sarepta Therapeutics and GH Research go up and down completely randomly.

Pair Corralation between Sarepta Therapeutics and GH Research

Given the investment horizon of 90 days Sarepta Therapeutics is expected to under-perform the GH Research. But the stock apears to be less risky and, when comparing its historical volatility, Sarepta Therapeutics is 2.97 times less risky than GH Research. The stock trades about -0.06 of its potential returns per unit of risk. The GH Research PLC is currently generating about 0.27 of returns per unit of risk over similar time horizon. If you would invest  700.00  in GH Research PLC on October 22, 2024 and sell it today you would earn a total of  188.00  from holding GH Research PLC or generate 26.86% return on investment over 90 days.

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

Sarepta Therapeutics  vs.  GH Research PLC

Sarepta Therapeutics

Risk-Adjusted Performance

0 of 100

Very Weak

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

GH Research PLC

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in GH Research PLC are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unfluctuating basic indicators, GH Research unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Sarepta Therapeutics and GH Research

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

The idea behind Sarepta Therapeutics and GH Research PLC 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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.