Correlation Between Vincerx Pharma and Sangamo Therapeutics

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

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

Diversification Opportunities for Vincerx Pharma and Sangamo Therapeutics

-0.75

Correlation Coefficient

Vincerx Pharma  Sangamo Therapeutics

Pay attention - limited upside

The 3 months correlation between Vincerx and Sangamo is -0.75. Overlapping area represents the amount of risk that can be diversified away by holding Vincerx Pharma and Sangamo Therapeutics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sangamo Therapeutics and Vincerx Pharma 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 Vincerx Pharma are associated (or correlated) with Sangamo Therapeutics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sangamo Therapeutics has no effect on the direction of Vincerx Pharma i.e., Vincerx Pharma and Sangamo Therapeutics go up and down completely randomly.

Pair Corralation between Vincerx Pharma and Sangamo Therapeutics

Given the investment horizon of 90 days Vincerx Pharma is expected to generate 20.93 times less return on investment than Sangamo Therapeutics. But when comparing it to its historical volatility, Vincerx Pharma is 1.0 times less risky than Sangamo Therapeutics. It trades about 0.0 of its potential returns per unit of risk. Sangamo Therapeutics is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  303.00  in Sangamo Therapeutics on October 1, 2024 and sell it today you would lose (47.00) from holding Sangamo Therapeutics or give up 15.51% of portfolio value over 90 days.

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

Vincerx Pharma  vs.  Sangamo Therapeutics

Vincerx Pharma

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Vincerx Pharma 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 rather sound which may send shares a bit higher in January 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Sangamo Therapeutics

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Sangamo Therapeutics are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. In spite of very uncertain primary indicators, Sangamo Therapeutics displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Vincerx Pharma and Sangamo Therapeutics

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

The idea behind Vincerx Pharma and Sangamo 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.