Correlation Between Stoke Therapeutics and Ascendis Pharma

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

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

Diversification Opportunities for Stoke Therapeutics and Ascendis Pharma

-0.43

Correlation Coefficient

Stoke Therapeutics  Ascendis Pharma

Very good diversification

The 3 months correlation between Stoke and Ascendis is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding Stoke Therapeutics and Ascendis Pharma AS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ascendis Pharma AS and Stoke 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 Stoke Therapeutics are associated (or correlated) with Ascendis Pharma. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ascendis Pharma AS has no effect on the direction of Stoke Therapeutics i.e., Stoke Therapeutics and Ascendis Pharma go up and down completely randomly.

Pair Corralation between Stoke Therapeutics and Ascendis Pharma

Given the investment horizon of 90 days Stoke Therapeutics is expected to under-perform the Ascendis Pharma. In addition to that, Stoke Therapeutics is 1.52 times more volatile than Ascendis Pharma AS. It trades about -0.12 of its total potential returns per unit of risk. Ascendis Pharma AS is currently generating about 0.15 per unit of volatility. If you would invest  13,207  in Ascendis Pharma AS on October 6, 2024 and sell it today you would earn a total of  833.00  from holding Ascendis Pharma AS or generate 6.31% return on investment over 90 days.

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

Stoke Therapeutics  vs.  Ascendis Pharma AS

Stoke Therapeutics

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Stoke Therapeutics are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent basic indicators, Stoke Therapeutics is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Ascendis Pharma AS

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Ascendis Pharma AS are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound basic indicators, Ascendis Pharma is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Stoke Therapeutics and Ascendis Pharma

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

The idea behind Stoke Therapeutics and Ascendis Pharma AS 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.