Correlation Between Iovance Biotherapeutics and PTC Therapeutics

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

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

Diversification Opportunities for Iovance Biotherapeutics and PTC Therapeutics

0.11

Correlation Coefficient

Iovance Biotherapeutics  PTC Therapeutics

Average diversification

The 3 months correlation between Iovance and PTC is 0.11. Overlapping area represents the amount of risk that can be diversified away by holding Iovance Biotherapeutics and PTC Therapeutics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PTC Therapeutics and Iovance Biotherapeutics 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 Iovance Biotherapeutics are associated (or correlated) with PTC Therapeutics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PTC Therapeutics has no effect on the direction of Iovance Biotherapeutics i.e., Iovance Biotherapeutics and PTC Therapeutics go up and down completely randomly.

Pair Corralation between Iovance Biotherapeutics and PTC Therapeutics

Given the investment horizon of 90 days Iovance Biotherapeutics is expected to generate 7.07 times less return on investment than PTC Therapeutics. In addition to that, Iovance Biotherapeutics is 1.58 times more volatile than PTC Therapeutics. It trades about 0.02 of its total potential returns per unit of risk. PTC Therapeutics is currently generating about 0.2 per unit of volatility. If you would invest  3,914  in PTC Therapeutics on August 15, 2024 and sell it today you would earn a total of  548.00  from holding PTC Therapeutics or generate 14.0% return on investment over 90 days.

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

Iovance Biotherapeutics  vs.  PTC Therapeutics

Iovance Biotherapeutics

Risk-Adjusted Performance

0 of 100

Very Weak

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

PTC Therapeutics

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in PTC Therapeutics are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain fundamental indicators, PTC Therapeutics unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Iovance Biotherapeutics and PTC Therapeutics

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

The idea behind Iovance Biotherapeutics and PTC 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.