Correlation Between Stoke Therapeutics and BeyondSpring

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

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

Diversification Opportunities for Stoke Therapeutics and BeyondSpring

-0.05

Correlation Coefficient

Stoke Therapeutics  BeyondSpring

Good diversification

The 3 months correlation between Stoke and BeyondSpring is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding Stoke Therapeutics and BeyondSpring in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BeyondSpring 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 BeyondSpring. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BeyondSpring has no effect on the direction of Stoke Therapeutics i.e., Stoke Therapeutics and BeyondSpring go up and down completely randomly.

Pair Corralation between Stoke Therapeutics and BeyondSpring

Given the investment horizon of 90 days Stoke Therapeutics is expected to generate 0.76 times more return on investment than BeyondSpring. However, Stoke Therapeutics is 1.32 times less risky than BeyondSpring. It trades about -0.09 of its potential returns per unit of risk. BeyondSpring is currently generating about -0.22 per unit of risk. If you would invest  1,310  in Stoke Therapeutics on September 4, 2024 and sell it today you would lose (103.00) from holding Stoke Therapeutics or give up 7.86% of portfolio value over 90 days.

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

Stoke Therapeutics  vs.  BeyondSpring

Stoke Therapeutics

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Stoke Therapeutics has generated negative risk-adjusted returns adding no value to investors with long positions. Despite conflicting performance in the last few months, the Stock's basic indicators remain quite persistent which may send shares a bit higher in January 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

BeyondSpring

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days BeyondSpring has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest unfluctuating performance, the Stock's basic indicators remain strong and the recent confusion on Wall Street may also be a sign of long-lasting gains for the firm traders.

Pair Trading with Stoke Therapeutics and BeyondSpring

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

The idea behind Stoke Therapeutics and BeyondSpring 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.