Correlation Between Spero Therapeutics and Assembly Biosciences

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

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

Diversification Opportunities for Spero Therapeutics and Assembly Biosciences

0.82

Correlation Coefficient

Spero Therapeutics  Assembly Biosciences

Very poor diversification

The 3 months correlation between Spero and Assembly is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Spero Therapeutics and Assembly Biosciences in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Assembly Biosciences and Spero Therapeutics 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 Spero Therapeutics are associated (or correlated) with Assembly Biosciences. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Assembly Biosciences has no effect on the direction of Spero Therapeutics i.e., Spero Therapeutics and Assembly Biosciences go up and down completely randomly.

Pair Corralation between Spero Therapeutics and Assembly Biosciences

Given the investment horizon of 90 days Spero Therapeutics is expected to generate 9.28 times more return on investment than Assembly Biosciences. However, Spero Therapeutics is 9.28 times more volatile than Assembly Biosciences. It trades about 0.13 of its potential returns per unit of risk. Assembly Biosciences is currently generating about 0.13 per unit of risk. If you would invest  61.00  in Spero Therapeutics on May 3, 2025 and sell it today you would earn a total of  171.00  from holding Spero Therapeutics or generate 280.33% return on investment over 90 days.

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

Spero Therapeutics  vs.  Assembly Biosciences

Spero Therapeutics

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Spero Therapeutics are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of very weak basic indicators, Spero Therapeutics displayed solid returns over the last few months and may actually be approaching a breakup point.

Assembly Biosciences

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Assembly Biosciences are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak primary indicators, Assembly Biosciences sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Spero Therapeutics and Assembly Biosciences

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

The idea behind Spero Therapeutics and Assembly Biosciences 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..