Correlation Between Sage Therapeutic and Apellis Pharmaceuticals

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

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

Diversification Opportunities for Sage Therapeutic and Apellis Pharmaceuticals

-0.24

Correlation Coefficient

Sage Therapeutic  Apellis Pharmaceuticals

Very good diversification

The 3 months correlation between Sage and Apellis is -0.24. Overlapping area represents the amount of risk that can be diversified away by holding Sage Therapeutic and Apellis Pharmaceuticals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Apellis Pharmaceuticals and Sage Therapeutic 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 Sage Therapeutic are associated (or correlated) with Apellis Pharmaceuticals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Apellis Pharmaceuticals has no effect on the direction of Sage Therapeutic i.e., Sage Therapeutic and Apellis Pharmaceuticals go up and down completely randomly.

Pair Corralation between Sage Therapeutic and Apellis Pharmaceuticals

Given the investment horizon of 90 days Sage Therapeutic is expected to under-perform the Apellis Pharmaceuticals. In addition to that, Sage Therapeutic is 1.49 times more volatile than Apellis Pharmaceuticals. It trades about -0.1 of its total potential returns per unit of risk. Apellis Pharmaceuticals is currently generating about 0.03 per unit of volatility. If you would invest  3,272  in Apellis Pharmaceuticals on September 21, 2024 and sell it today you would earn a total of  130.00  from holding Apellis Pharmaceuticals or generate 3.97% return on investment over 90 days.

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

Sage Therapeutic  vs.  Apellis Pharmaceuticals

Sage Therapeutic

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sage Therapeutic has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's technical and fundamental indicators remain rather sound which may send shares a bit higher in January 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Apellis Pharmaceuticals

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Apellis Pharmaceuticals are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak essential indicators, Apellis Pharmaceuticals may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Sage Therapeutic and Apellis Pharmaceuticals

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

The idea behind Sage Therapeutic and Apellis Pharmaceuticals 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..