Correlation Between Seres Therapeutics and Annovis Bio

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

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

Diversification Opportunities for Seres Therapeutics and Annovis Bio

0.08

Correlation Coefficient

Seres Therapeutics  Annovis Bio

Significant diversification

The 3 months correlation between Seres and Annovis is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding Seres Therapeutics and Annovis Bio in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Annovis Bio and Seres 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 Seres Therapeutics are associated (or correlated) with Annovis Bio. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Annovis Bio has no effect on the direction of Seres Therapeutics i.e., Seres Therapeutics and Annovis Bio go up and down completely randomly.

Pair Corralation between Seres Therapeutics and Annovis Bio

Given the investment horizon of 90 days Seres Therapeutics is expected to under-perform the Annovis Bio. But the stock apears to be less risky and, when comparing its historical volatility, Seres Therapeutics is 1.16 times less risky than Annovis Bio. The stock trades about -0.02 of its potential returns per unit of risk. The Annovis Bio is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  1,164  in Annovis Bio on September 3, 2024 and sell it today you would lose (493.00) from holding Annovis Bio or give up 42.35% of portfolio value over 90 days.

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

Seres Therapeutics  vs.  Annovis Bio

Seres Therapeutics

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Seres Therapeutics are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat unsteady basic indicators, Seres Therapeutics sustained solid returns over the last few months and may actually be approaching a breakup point.

Annovis Bio

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Annovis Bio has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with Seres Therapeutics and Annovis Bio

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

The idea behind Seres Therapeutics and Annovis Bio 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 CEOs Directory module to screen CEOs from public companies around the world.