Correlation Between Wesana Health and Tryp Therapeutics

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

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

Diversification Opportunities for Wesana Health and Tryp Therapeutics

-0.02

Correlation Coefficient

Wesana Health  Tryp Therapeutics

Good diversification

The 3 months correlation between Wesana and Tryp is -0.02. Overlapping area represents the amount of risk that can be diversified away by holding Wesana Health Holdings and Tryp Therapeutics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tryp Therapeutics and Wesana Health 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 Wesana Health Holdings are associated (or correlated) with Tryp Therapeutics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tryp Therapeutics has no effect on the direction of Wesana Health i.e., Wesana Health and Tryp Therapeutics go up and down completely randomly.

Pair Corralation between Wesana Health and Tryp Therapeutics

If you would invest  0.79  in Wesana Health Holdings on September 4, 2024 and sell it today you would earn a total of  0.18  from holding Wesana Health Holdings or generate 22.78% return on investment over 90 days.

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

Wesana Health Holdings  vs.  Tryp Therapeutics

Wesana Health Holdings

Risk-Adjusted Performance

12 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Wesana Health Holdings are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite nearly inconsistent basic indicators, Wesana Health reported solid returns over the last few months and may actually be approaching a breakup point.

Tryp Therapeutics

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Tryp Therapeutics has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Tryp Therapeutics is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Wesana Health and Tryp Therapeutics

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

The idea behind Wesana Health Holdings and Tryp 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.