Correlation Between Prometheus Biosciences and Halozyme Therapeutics

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

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

Diversification Opportunities for Prometheus Biosciences and Halozyme Therapeutics

-0.54

Correlation Coefficient

Prometheus Biosciences  Halozyme Therapeutics

Excellent diversification

The 3 months correlation between Prometheus and Halozyme is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding Prometheus Biosciences and Halozyme Therapeutics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Halozyme Therapeutics and Prometheus Biosciences 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 Prometheus Biosciences are associated (or correlated) with Halozyme Therapeutics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Halozyme Therapeutics has no effect on the direction of Prometheus Biosciences i.e., Prometheus Biosciences and Halozyme Therapeutics go up and down completely randomly.

Pair Corralation between Prometheus Biosciences and Halozyme Therapeutics

If you would invest  19,992  in Prometheus Biosciences on September 20, 2024 and sell it today you would earn a total of  0.00  from holding Prometheus Biosciences or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	1.59%
Values	Daily Returns

Prometheus Biosciences  vs.  Halozyme Therapeutics

Prometheus Biosciences

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Prometheus Biosciences has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong fundamental indicators, Prometheus Biosciences is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

Halozyme Therapeutics

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Halozyme Therapeutics has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's essential indicators remain very healthy which may send shares a bit higher in January 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with Prometheus Biosciences and Halozyme Therapeutics

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

The idea behind Prometheus Biosciences and Halozyme 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.

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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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.