Correlation Between Sutro Biopharma and Crinetics Pharmaceuticals

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

By analyzing existing cross correlation between Sutro Biopharma and Crinetics Pharmaceuticals, you can compare the effects of market volatilities on Sutro Biopharma and Crinetics Pharmaceuticals 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 Sutro Biopharma with a short position of Crinetics Pharmaceuticals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sutro Biopharma and Crinetics Pharmaceuticals.

Diversification Opportunities for Sutro Biopharma and Crinetics Pharmaceuticals

0.67

Correlation Coefficient

Sutro Biopharma  Crinetics Pharmaceuticals

Poor diversification

The 3 months correlation between Sutro and Crinetics is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Sutro Biopharma and Crinetics Pharmaceuticals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Crinetics Pharmaceuticals and Sutro Biopharma 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 Sutro Biopharma are associated (or correlated) with Crinetics Pharmaceuticals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Crinetics Pharmaceuticals has no effect on the direction of Sutro Biopharma i.e., Sutro Biopharma and Crinetics Pharmaceuticals go up and down completely randomly.

Pair Corralation between Sutro Biopharma and Crinetics Pharmaceuticals

Given the investment horizon of 90 days Sutro Biopharma is expected to under-perform the Crinetics Pharmaceuticals. In addition to that, Sutro Biopharma is 1.2 times more volatile than Crinetics Pharmaceuticals. It trades about -0.02 of its total potential returns per unit of risk. Crinetics Pharmaceuticals is currently generating about 0.05 per unit of volatility. If you would invest  1,992  in Crinetics Pharmaceuticals on October 25, 2024 and sell it today you would earn a total of  1,908  from holding Crinetics Pharmaceuticals or generate 95.78% return on investment over 90 days.

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

Sutro Biopharma  vs.  Crinetics Pharmaceuticals

Sutro Biopharma

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sutro Biopharma has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in February 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Crinetics Pharmaceuticals

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Crinetics Pharmaceuticals has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Sutro Biopharma and Crinetics Pharmaceuticals

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

The idea behind Sutro Biopharma and Crinetics Pharmaceuticals 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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.