Correlation Between Seres Therapeutics and ImmunoGen

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

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

Diversification Opportunities for Seres Therapeutics and ImmunoGen

-0.4

Correlation Coefficient

Seres Therapeutics  ImmunoGen

Very good diversification

The 3 months correlation between Seres and ImmunoGen is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding Seres Therapeutics and ImmunoGen in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ImmunoGen 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 ImmunoGen. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ImmunoGen has no effect on the direction of Seres Therapeutics i.e., Seres Therapeutics and ImmunoGen go up and down completely randomly.

Pair Corralation between Seres Therapeutics and ImmunoGen

Given the investment horizon of 90 days Seres Therapeutics is expected to under-perform the ImmunoGen. In addition to that, Seres Therapeutics is 2.77 times more volatile than ImmunoGen. It trades about -0.02 of its total potential returns per unit of risk. ImmunoGen is currently generating about 0.18 per unit of volatility. If you would invest  1,575  in ImmunoGen on August 31, 2024 and sell it today you would earn a total of  245.00  from holding ImmunoGen or generate 15.56% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	8.56%
Values	Daily Returns

Seres Therapeutics  vs.  ImmunoGen

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 uncertain basic indicators, Seres Therapeutics sustained solid returns over the last few months and may actually be approaching a breakup point.

ImmunoGen

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ImmunoGen has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy technical and fundamental indicators, ImmunoGen is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Seres Therapeutics and ImmunoGen

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

The idea behind Seres Therapeutics and ImmunoGen 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.