Correlation Between United Therapeutics and Ascendis Pharma

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

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

Diversification Opportunities for United Therapeutics and Ascendis Pharma

-0.83

Correlation Coefficient

United Therapeutics  Ascendis Pharma

Pay attention - limited upside

The 3 months correlation between United and Ascendis is -0.83. Overlapping area represents the amount of risk that can be diversified away by holding United Therapeutics and Ascendis Pharma AS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ascendis Pharma AS and United 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 United Therapeutics are associated (or correlated) with Ascendis Pharma. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ascendis Pharma AS has no effect on the direction of United Therapeutics i.e., United Therapeutics and Ascendis Pharma go up and down completely randomly.

Pair Corralation between United Therapeutics and Ascendis Pharma

Given the investment horizon of 90 days United Therapeutics is expected to generate 0.97 times more return on investment than Ascendis Pharma. However, United Therapeutics is 1.03 times less risky than Ascendis Pharma. It trades about 0.21 of its potential returns per unit of risk. Ascendis Pharma AS is currently generating about -0.19 per unit of risk. If you would invest  21,416  in United Therapeutics on February 19, 2024 and sell it today you would earn a total of  6,010  from holding United Therapeutics or generate 28.06% return on investment over 90 days.

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

United Therapeutics  vs.  Ascendis Pharma AS

United Therapeutics

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in United Therapeutics are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak technical indicators, United Therapeutics reported solid returns over the last few months and may actually be approaching a breakup point.

Ascendis Pharma AS

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Ascendis Pharma AS has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain rather sound which may send shares a bit higher in June 2024. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with United Therapeutics and Ascendis Pharma

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

The idea behind United Therapeutics and Ascendis Pharma AS 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.