Correlation Between Protagonist Therapeutics and Zentalis Pharmaceuticals

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

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

Diversification Opportunities for Protagonist Therapeutics and Zentalis Pharmaceuticals

-0.02

Correlation Coefficient

Protagonist Therapeutics  Zentalis Pharmaceuticals

Good diversification

The 3 months correlation between Protagonist and Zentalis is -0.02. Overlapping area represents the amount of risk that can be diversified away by holding Protagonist Therapeutics and Zentalis Pharmaceuticals Llc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Zentalis Pharmaceuticals and Protagonist 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 Protagonist Therapeutics are associated (or correlated) with Zentalis Pharmaceuticals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Zentalis Pharmaceuticals has no effect on the direction of Protagonist Therapeutics i.e., Protagonist Therapeutics and Zentalis Pharmaceuticals go up and down completely randomly.

Pair Corralation between Protagonist Therapeutics and Zentalis Pharmaceuticals

Given the investment horizon of 90 days Protagonist Therapeutics is expected to generate 1.31 times less return on investment than Zentalis Pharmaceuticals. But when comparing it to its historical volatility, Protagonist Therapeutics is 1.41 times less risky than Zentalis Pharmaceuticals. It trades about 0.04 of its potential returns per unit of risk. Zentalis Pharmaceuticals Llc is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  305.00  in Zentalis Pharmaceuticals Llc on September 17, 2024 and sell it today you would earn a total of  4.00  from holding Zentalis Pharmaceuticals Llc or generate 1.31% return on investment over 90 days.

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

Protagonist Therapeutics  vs.  Zentalis Pharmaceuticals Llc

Protagonist Therapeutics

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Protagonist Therapeutics has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unsteady performance, the Stock's technical and fundamental indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Zentalis Pharmaceuticals

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Zentalis Pharmaceuticals Llc has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain quite persistent which may send shares a bit higher in January 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Pair Trading with Protagonist Therapeutics and Zentalis Pharmaceuticals

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

The idea behind Protagonist Therapeutics and Zentalis Pharmaceuticals Llc 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.