Correlation Between Ultragenyx and PTC Therapeutics

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

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

Diversification Opportunities for Ultragenyx and PTC Therapeutics

-0.09

Correlation Coefficient

Ultragenyx  PTC Therapeutics

Good diversification

The 3 months correlation between Ultragenyx and PTC is -0.09. Overlapping area represents the amount of risk that can be diversified away by holding Ultragenyx and PTC Therapeutics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PTC Therapeutics and Ultragenyx 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 Ultragenyx are associated (or correlated) with PTC Therapeutics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PTC Therapeutics has no effect on the direction of Ultragenyx i.e., Ultragenyx and PTC Therapeutics go up and down completely randomly.

Pair Corralation between Ultragenyx and PTC Therapeutics

Given the investment horizon of 90 days Ultragenyx is expected to generate 0.87 times more return on investment than PTC Therapeutics. However, Ultragenyx is 1.15 times less risky than PTC Therapeutics. It trades about 0.3 of its potential returns per unit of risk. PTC Therapeutics is currently generating about 0.07 per unit of risk. If you would invest  5,173  in Ultragenyx on June 16, 2024 and sell it today you would earn a total of  701.00  from holding Ultragenyx or generate 13.55% return on investment over 90 days.

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

Ultragenyx  vs.  PTC Therapeutics

Ultragenyx

Risk-Adjusted Performance

19 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Ultragenyx are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak basic indicators, Ultragenyx exhibited solid returns over the last few months and may actually be approaching a breakup point.

PTC Therapeutics

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days PTC Therapeutics has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable fundamental indicators, PTC Therapeutics is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Ultragenyx and PTC Therapeutics

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

The idea behind Ultragenyx and PTC 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.