Correlation Between Trevena and Paratek Pharmaceuticals

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

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

Diversification Opportunities for Trevena and Paratek Pharmaceuticals

-0.28

Correlation Coefficient

Trevena  Paratek Pharmaceuticals

Very good diversification

The 3 months correlation between Trevena and Paratek is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding Trevena and Paratek Pharmaceuticals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Paratek Pharmaceuticals and Trevena 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 Trevena are associated (or correlated) with Paratek Pharmaceuticals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Paratek Pharmaceuticals has no effect on the direction of Trevena i.e., Trevena and Paratek Pharmaceuticals go up and down completely randomly.

Pair Corralation between Trevena and Paratek Pharmaceuticals

If you would invest  218.00  in Paratek Pharmaceuticals on September 3, 2024 and sell it today you would earn a total of  0.00  from holding Paratek Pharmaceuticals or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	3.23%
Values	Daily Returns

Trevena  vs.  Paratek Pharmaceuticals

Trevena

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Trevena 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 January 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Paratek Pharmaceuticals

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Paratek Pharmaceuticals has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent basic indicators, Paratek Pharmaceuticals is not utilizing all of its potentials. The current stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Trevena and Paratek Pharmaceuticals

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

The idea behind Trevena and Paratek 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.