Correlation Between Satsuma Pharmaceuticals and Vaccinex

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

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

Diversification Opportunities for Satsuma Pharmaceuticals and Vaccinex

-0.33

Correlation Coefficient

Satsuma Pharmaceuticals  Vaccinex

Very good diversification

The 3 months correlation between Satsuma and Vaccinex is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding Satsuma Pharmaceuticals and Vaccinex in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vaccinex and Satsuma Pharmaceuticals 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 Satsuma Pharmaceuticals are associated (or correlated) with Vaccinex. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vaccinex has no effect on the direction of Satsuma Pharmaceuticals i.e., Satsuma Pharmaceuticals and Vaccinex go up and down completely randomly.

Pair Corralation between Satsuma Pharmaceuticals and Vaccinex

Given the investment horizon of 90 days Satsuma Pharmaceuticals is expected to generate 1.02 times more return on investment than Vaccinex. However, Satsuma Pharmaceuticals is 1.02 times more volatile than Vaccinex. It trades about 0.05 of its potential returns per unit of risk. Vaccinex is currently generating about -0.07 per unit of risk. If you would invest  92.00  in Satsuma Pharmaceuticals on August 31, 2024 and sell it today you would earn a total of  18.00  from holding Satsuma Pharmaceuticals or generate 19.57% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	21.97%
Values	Daily Returns

Satsuma Pharmaceuticals  vs.  Vaccinex

Satsuma Pharmaceuticals

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Satsuma Pharmaceuticals has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Satsuma Pharmaceuticals is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Vaccinex

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Vaccinex 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 strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with Satsuma Pharmaceuticals and Vaccinex

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

The idea behind Satsuma Pharmaceuticals and Vaccinex 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.