Correlation Between Immunovant and Seres Therapeutics

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

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

Diversification Opportunities for Immunovant and Seres Therapeutics

0.12

Correlation Coefficient

Immunovant  Seres Therapeutics

Average diversification

The 3 months correlation between Immunovant and Seres is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding Immunovant and Seres Therapeutics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Seres Therapeutics and Immunovant 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 Immunovant are associated (or correlated) with Seres Therapeutics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Seres Therapeutics has no effect on the direction of Immunovant i.e., Immunovant and Seres Therapeutics go up and down completely randomly.

Pair Corralation between Immunovant and Seres Therapeutics

Given the investment horizon of 90 days Immunovant is expected to under-perform the Seres Therapeutics. But the stock apears to be less risky and, when comparing its historical volatility, Immunovant is 2.34 times less risky than Seres Therapeutics. The stock trades about -0.02 of its potential returns per unit of risk. The Seres Therapeutics is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  82.00  in Seres Therapeutics on September 4, 2024 and sell it today you would earn a total of  11.00  from holding Seres Therapeutics or generate 13.41% return on investment over 90 days.

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

Immunovant  vs.  Seres Therapeutics

Immunovant

Risk-Adjusted Performance

0 of 100

Very Weak

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

Seres Therapeutics

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Seres Therapeutics are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat conflicting basic indicators, Seres Therapeutics sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Immunovant and Seres Therapeutics

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

The idea behind Immunovant and Seres 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.

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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.