Correlation Between Verastem and Corbus Pharmaceuticals

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

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

Diversification Opportunities for Verastem and Corbus Pharmaceuticals

-0.6

Correlation Coefficient

Verastem  Corbus Pharmaceuticals

Excellent diversification

The 3 months correlation between Verastem and Corbus is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding Verastem and Corbus Pharmaceuticals Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Corbus Pharmaceuticals and Verastem 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 Verastem are associated (or correlated) with Corbus Pharmaceuticals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Corbus Pharmaceuticals has no effect on the direction of Verastem i.e., Verastem and Corbus Pharmaceuticals go up and down completely randomly.

Pair Corralation between Verastem and Corbus Pharmaceuticals

Given the investment horizon of 90 days Verastem is expected to generate 0.7 times more return on investment than Corbus Pharmaceuticals. However, Verastem is 1.43 times less risky than Corbus Pharmaceuticals. It trades about 0.23 of its potential returns per unit of risk. Corbus Pharmaceuticals Holding is currently generating about -0.13 per unit of risk. If you would invest  242.00  in Verastem on September 3, 2024 and sell it today you would earn a total of  292.00  from holding Verastem or generate 120.66% return on investment over 90 days.

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

Verastem  vs.  Corbus Pharmaceuticals Holding

Verastem

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Verastem are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. In spite of very weak basic indicators, Verastem displayed solid returns over the last few months and may actually be approaching a breakup point.

Corbus Pharmaceuticals

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Corbus Pharmaceuticals Holding has generated negative risk-adjusted returns adding no value to investors with long positions. Even with unsteady performance in the last few months, the Stock's fundamental drivers remain relatively invariable which may send shares a bit higher in January 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Pair Trading with Verastem and Corbus Pharmaceuticals

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

The idea behind Verastem and Corbus Pharmaceuticals Holding 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.