Correlation Between Structure Therapeutics and Arcus Biosciences

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

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

Diversification Opportunities for Structure Therapeutics and Arcus Biosciences

0.24

Correlation Coefficient

Structure Therapeutics  Arcus Biosciences

Modest diversification

The 3 months correlation between Structure and Arcus is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding Structure Therapeutics America and Arcus Biosciences in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Arcus Biosciences and Structure Therapeutics 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 Structure Therapeutics American are associated (or correlated) with Arcus Biosciences. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Arcus Biosciences has no effect on the direction of Structure Therapeutics i.e., Structure Therapeutics and Arcus Biosciences go up and down completely randomly.

Pair Corralation between Structure Therapeutics and Arcus Biosciences

Given the investment horizon of 90 days Structure Therapeutics American is expected to under-perform the Arcus Biosciences. In addition to that, Structure Therapeutics is 1.18 times more volatile than Arcus Biosciences. It trades about -0.03 of its total potential returns per unit of risk. Arcus Biosciences is currently generating about -0.01 per unit of volatility. If you would invest  1,657  in Arcus Biosciences on September 3, 2024 and sell it today you would lose (113.00) from holding Arcus Biosciences or give up 6.82% of portfolio value over 90 days.

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

Structure Therapeutics America  vs.  Arcus Biosciences

Structure Therapeutics

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Structure Therapeutics American has generated negative risk-adjusted returns adding no value to investors with long positions. Even with latest unsteady performance, the Stock's fundamental indicators remain invariable and the latest agitation on Wall Street may also be a sign of long-running gains for the enterprise retail investors.

Arcus Biosciences

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Arcus Biosciences has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Arcus Biosciences is not utilizing all of its potentials. The recent stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Structure Therapeutics and Arcus Biosciences

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

The idea behind Structure Therapeutics American and Arcus Biosciences 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.