Correlation Between Deciphera Pharmaceuticals and Alkermes Plc

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

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

Diversification Opportunities for Deciphera Pharmaceuticals and Alkermes Plc

-0.17

Correlation Coefficient

Deciphera Pharmaceuticals  Alkermes Plc

Good diversification

The 3 months correlation between Deciphera and Alkermes is -0.17. Overlapping area represents the amount of risk that can be diversified away by holding Deciphera Pharmaceuticals LLC and Alkermes Plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alkermes Plc and Deciphera 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 Deciphera Pharmaceuticals LLC are associated (or correlated) with Alkermes Plc. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alkermes Plc has no effect on the direction of Deciphera Pharmaceuticals i.e., Deciphera Pharmaceuticals and Alkermes Plc go up and down completely randomly.

Pair Corralation between Deciphera Pharmaceuticals and Alkermes Plc

Given the investment horizon of 90 days Deciphera Pharmaceuticals LLC is expected to under-perform the Alkermes Plc. In addition to that, Deciphera Pharmaceuticals is 1.53 times more volatile than Alkermes Plc. It trades about -0.02 of its total potential returns per unit of risk. Alkermes Plc is currently generating about 0.03 per unit of volatility. If you would invest  2,549  in Alkermes Plc on September 13, 2024 and sell it today you would earn a total of  501.00  from holding Alkermes Plc or generate 19.65% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	29.29%
Values	Daily Returns

Deciphera Pharmaceuticals LLC  vs.  Alkermes Plc

Deciphera Pharmaceuticals

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Deciphera Pharmaceuticals LLC has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong basic indicators, Deciphera Pharmaceuticals is not utilizing all of its potentials. The current stock price confusion, may contribute to short-horizon losses for the traders.

Alkermes Plc

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Alkermes Plc are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively inconsistent forward-looking signals, Alkermes Plc may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Deciphera Pharmaceuticals and Alkermes Plc

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

The idea behind Deciphera Pharmaceuticals LLC and Alkermes Plc 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.