Correlation Between Terns Pharmaceuticals and Argenx NV

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

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

Diversification Opportunities for Terns Pharmaceuticals and Argenx NV

-0.71

Correlation Coefficient

Terns Pharmaceuticals  Argenx NV

Pay attention - limited upside

The 3 months correlation between Terns and Argenx is -0.71. Overlapping area represents the amount of risk that can be diversified away by holding Terns Pharmaceuticals and argenx NV ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on argenx NV ADR and Terns Pharmaceuticals 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 Terns Pharmaceuticals are associated (or correlated) with Argenx NV. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of argenx NV ADR has no effect on the direction of Terns Pharmaceuticals i.e., Terns Pharmaceuticals and Argenx NV go up and down completely randomly.

Pair Corralation between Terns Pharmaceuticals and Argenx NV

Given the investment horizon of 90 days Terns Pharmaceuticals is expected to under-perform the Argenx NV. In addition to that, Terns Pharmaceuticals is 2.65 times more volatile than argenx NV ADR. It trades about -0.06 of its total potential returns per unit of risk. argenx NV ADR is currently generating about 0.15 per unit of volatility. If you would invest  46,642  in argenx NV ADR on October 10, 2024 and sell it today you would earn a total of  18,220  from holding argenx NV ADR or generate 39.06% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	99.2%
Values	Daily Returns

Terns Pharmaceuticals  vs.  argenx NV ADR

Terns Pharmaceuticals

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Terns Pharmaceuticals 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.

argenx NV ADR

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in argenx NV ADR are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unsteady technical and fundamental indicators, Argenx NV showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Terns Pharmaceuticals and Argenx NV

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

The idea behind Terns Pharmaceuticals and argenx NV ADR 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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.