Correlation Between PureTech Health and Phathom Pharmaceuticals

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

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

Diversification Opportunities for PureTech Health and Phathom Pharmaceuticals

0.42

Correlation Coefficient

PureTech Health  Phathom Pharmaceuticals

Very weak diversification

The 3 months correlation between PureTech and Phathom is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding PureTech Health PLC and Phathom Pharmaceuticals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Phathom Pharmaceuticals and PureTech 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 PureTech Health PLC are associated (or correlated) with Phathom Pharmaceuticals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Phathom Pharmaceuticals has no effect on the direction of PureTech Health i.e., PureTech Health and Phathom Pharmaceuticals go up and down completely randomly.

Pair Corralation between PureTech Health and Phathom Pharmaceuticals

Given the investment horizon of 90 days PureTech Health is expected to generate 10.15 times less return on investment than Phathom Pharmaceuticals. But when comparing it to its historical volatility, PureTech Health PLC is 4.95 times less risky than Phathom Pharmaceuticals. It trades about 0.07 of its potential returns per unit of risk. Phathom Pharmaceuticals is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest  415.00  in Phathom Pharmaceuticals on April 26, 2025 and sell it today you would earn a total of  490.00  from holding Phathom Pharmaceuticals or generate 118.07% return on investment over 90 days.

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

PureTech Health PLC  vs.  Phathom Pharmaceuticals

PureTech Health PLC

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in PureTech Health PLC are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of rather unfluctuating basic indicators, PureTech Health may actually be approaching a critical reversion point that can send shares even higher in August 2025.

Phathom Pharmaceuticals

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Phathom Pharmaceuticals are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Phathom Pharmaceuticals unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with PureTech Health and Phathom Pharmaceuticals

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

The idea behind PureTech Health PLC and Phathom Pharmaceuticals 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.

Check out your portfolio center.

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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.