Correlation Between Terns Pharmaceuticals and Galera Therapeutics

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

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

Diversification Opportunities for Terns Pharmaceuticals and Galera Therapeutics

0.45

Correlation Coefficient

Terns Pharmaceuticals  Galera Therapeutics

Very weak diversification

The 3 months correlation between Terns and Galera is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding Terns Pharmaceuticals and Galera Therapeutics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Galera Therapeutics and Terns 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 Terns Pharmaceuticals are associated (or correlated) with Galera Therapeutics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Galera Therapeutics has no effect on the direction of Terns Pharmaceuticals i.e., Terns Pharmaceuticals and Galera Therapeutics go up and down completely randomly.

Pair Corralation between Terns Pharmaceuticals and Galera Therapeutics

If you would invest  258.00  in Galera Therapeutics on September 2, 2024 and sell it today you would earn a total of  0.00  from holding Galera Therapeutics or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	1.56%
Values	Daily Returns

Terns Pharmaceuticals  vs.  Galera Therapeutics

Terns Pharmaceuticals

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Terns Pharmaceuticals 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 healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Galera Therapeutics

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Terns Pharmaceuticals and Galera Therapeutics

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

The idea behind Terns Pharmaceuticals and Galera 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.