Correlation Between Agios Pharm and ADC Therapeutics

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

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

Diversification Opportunities for Agios Pharm and ADC Therapeutics

0.75

Correlation Coefficient

Agios Pharm  ADC Therapeutics

Poor diversification

The 3 months correlation between Agios and ADC is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Agios Pharm and ADC Therapeutics SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ADC Therapeutics and Agios Pharm 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 Agios Pharm are associated (or correlated) with ADC Therapeutics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ADC Therapeutics has no effect on the direction of Agios Pharm i.e., Agios Pharm and ADC Therapeutics go up and down completely randomly.

Pair Corralation between Agios Pharm and ADC Therapeutics

Given the investment horizon of 90 days Agios Pharm is expected to generate 4.62 times less return on investment than ADC Therapeutics. But when comparing it to its historical volatility, Agios Pharm is 3.0 times less risky than ADC Therapeutics. It trades about 0.11 of its potential returns per unit of risk. ADC Therapeutics SA is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest  142.00  in ADC Therapeutics SA on May 4, 2025 and sell it today you would earn a total of  127.00  from holding ADC Therapeutics SA or generate 89.44% return on investment over 90 days.

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

Agios Pharm  vs.  ADC Therapeutics SA

Agios Pharm

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Agios Pharm are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of very unsteady forward indicators, Agios Pharm displayed solid returns over the last few months and may actually be approaching a breakup point.

ADC Therapeutics

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in ADC Therapeutics SA are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak fundamental indicators, ADC Therapeutics unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Agios Pharm and ADC Therapeutics

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

The idea behind Agios Pharm and ADC Therapeutics SA 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.