Correlation Between Scholar Rock and Sutro Biopharma

Can any of the company-specific risk be diversified away by investing in both Scholar Rock and Sutro Biopharma 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 Scholar Rock and Sutro Biopharma into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Scholar Rock Holding and Sutro Biopharma, you can compare the effects of market volatilities on Scholar Rock and Sutro Biopharma 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 Scholar Rock with a short position of Sutro Biopharma. Check out your portfolio center. Please also check ongoing floating volatility patterns of Scholar Rock and Sutro Biopharma.

Diversification Opportunities for Scholar Rock and Sutro Biopharma

-0.45

Correlation Coefficient

Scholar Rock  Sutro Biopharma

Very good diversification

The 3 months correlation between Scholar and Sutro is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding Scholar Rock Holding and Sutro Biopharma in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sutro Biopharma and Scholar Rock 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 Scholar Rock Holding are associated (or correlated) with Sutro Biopharma. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sutro Biopharma has no effect on the direction of Scholar Rock i.e., Scholar Rock and Sutro Biopharma go up and down completely randomly.

Pair Corralation between Scholar Rock and Sutro Biopharma

Given the investment horizon of 90 days Scholar Rock Holding is expected to generate 0.75 times more return on investment than Sutro Biopharma. However, Scholar Rock Holding is 1.34 times less risky than Sutro Biopharma. It trades about 0.11 of its potential returns per unit of risk. Sutro Biopharma is currently generating about -0.03 per unit of risk. If you would invest  2,970  in Scholar Rock Holding on May 7, 2025 and sell it today you would earn a total of  729.00  from holding Scholar Rock Holding or generate 24.55% return on investment over 90 days.

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

Scholar Rock Holding  vs.  Sutro Biopharma

Scholar Rock Holding

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Scholar Rock Holding are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting basic indicators, Scholar Rock disclosed solid returns over the last few months and may actually be approaching a breakup point.

Sutro Biopharma

Risk-Adjusted Performance

Very Weak

Over the last 90 days Sutro Biopharma has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest conflicting performance, the Stock's basic indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Pair Trading with Scholar Rock and Sutro Biopharma

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

The idea behind Scholar Rock Holding and Sutro Biopharma 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.