Correlation Between Bio Techne and Sarepta Therapeutics

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

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

Diversification Opportunities for Bio Techne and Sarepta Therapeutics

0.41

Correlation Coefficient

Bio Techne  Sarepta Therapeutics

Very weak diversification

The 3 months correlation between Bio and Sarepta is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding Bio Techne and Sarepta Therapeutics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sarepta Therapeutics and Bio Techne 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 Bio Techne are associated (or correlated) with Sarepta Therapeutics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sarepta Therapeutics has no effect on the direction of Bio Techne i.e., Bio Techne and Sarepta Therapeutics go up and down completely randomly.

Pair Corralation between Bio Techne and Sarepta Therapeutics

Assuming the 90 days trading horizon Bio Techne is expected to generate 1.6 times more return on investment than Sarepta Therapeutics. However, Bio Techne is 1.6 times more volatile than Sarepta Therapeutics. It trades about 0.0 of its potential returns per unit of risk. Sarepta Therapeutics is currently generating about -0.17 per unit of risk. If you would invest  1,308  in Bio Techne on December 2, 2024 and sell it today you would lose (38.00) from holding Bio Techne or give up 2.91% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.39%
Values	Daily Returns

Bio Techne  vs.  Sarepta Therapeutics

Bio Techne

Risk-Adjusted Performance

Very Weak

Over the last 90 days Bio Techne has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong fundamental indicators, Bio Techne is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Sarepta Therapeutics

Risk-Adjusted Performance

Very Weak

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

Pair Trading with Bio Techne and Sarepta Therapeutics

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

The idea behind Bio Techne and Sarepta Therapeutics 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.