Correlation Between Therasense and Sonnet Biotherapeutics

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

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

Diversification Opportunities for Therasense and Sonnet Biotherapeutics

0.0

Correlation Coefficient

Therasense  Sonnet Biotherapeutics

Pay attention - limited upside

The 3 months correlation between Therasense and Sonnet is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Therasense and Sonnet Biotherapeutics Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sonnet Biotherapeutics and Therasense 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 Therasense are associated (or correlated) with Sonnet Biotherapeutics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sonnet Biotherapeutics has no effect on the direction of Therasense i.e., Therasense and Sonnet Biotherapeutics go up and down completely randomly.

Pair Corralation between Therasense and Sonnet Biotherapeutics

If you would invest  144.00  in Sonnet Biotherapeutics Holdings on December 22, 2024 and sell it today you would lose (6.00) from holding Sonnet Biotherapeutics Holdings or give up 4.17% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	98.36%
Values	Daily Returns

Therasense  vs.  Sonnet Biotherapeutics Holding

Therasense

Risk-Adjusted Performance

Very Weak

Over the last 90 days Therasense has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable technical and fundamental indicators, Therasense is not utilizing all of its potentials. The recent stock price agitation, may contribute to short-term losses for the retail investors.

Sonnet Biotherapeutics

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Sonnet Biotherapeutics Holdings are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, Sonnet Biotherapeutics is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Therasense and Sonnet Biotherapeutics

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

The idea behind Therasense and Sonnet Biotherapeutics Holdings 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.

Check out your portfolio center.

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.