Correlation Between Revolution Medicines and Protagonist Therapeutics

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

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

Diversification Opportunities for Revolution Medicines and Protagonist Therapeutics

0.23

Correlation Coefficient

Revolution Medicines  Protagonist Therapeutics

Modest diversification

The 3 months correlation between Revolution and Protagonist is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding Revolution Medicines and Protagonist Therapeutics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Protagonist Therapeutics and Revolution Medicines 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 Revolution Medicines are associated (or correlated) with Protagonist Therapeutics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Protagonist Therapeutics has no effect on the direction of Revolution Medicines i.e., Revolution Medicines and Protagonist Therapeutics go up and down completely randomly.

Pair Corralation between Revolution Medicines and Protagonist Therapeutics

Given the investment horizon of 90 days Revolution Medicines is expected to under-perform the Protagonist Therapeutics. In addition to that, Revolution Medicines is 1.26 times more volatile than Protagonist Therapeutics. It trades about -0.05 of its total potential returns per unit of risk. Protagonist Therapeutics is currently generating about 0.51 per unit of volatility. If you would invest  4,527  in Protagonist Therapeutics on March 12, 2025 and sell it today you would earn a total of  1,041  from holding Protagonist Therapeutics or generate 23.0% return on investment over 90 days.

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

Revolution Medicines  vs.  Protagonist Therapeutics

Revolution Medicines

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Revolution Medicines are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady primary indicators, Revolution Medicines may actually be approaching a critical reversion point that can send shares even higher in July 2025.

Protagonist Therapeutics

Risk-Adjusted Performance

Very Weak

Over the last 90 days Protagonist Therapeutics has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong technical and fundamental indicators, Protagonist Therapeutics is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Revolution Medicines and Protagonist Therapeutics

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

The idea behind Revolution Medicines and Protagonist 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.