Correlation Between Crinetics Pharmaceuticals and Scholar Rock

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

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

Diversification Opportunities for Crinetics Pharmaceuticals and Scholar Rock

-0.04

Correlation Coefficient

Crinetics Pharmaceuticals  Scholar Rock

Good diversification

The 3 months correlation between Crinetics and Scholar is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding Crinetics Pharmaceuticals and Scholar Rock Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Scholar Rock Holding and Crinetics Pharmaceuticals 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 Crinetics Pharmaceuticals are associated (or correlated) with Scholar Rock. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Scholar Rock Holding has no effect on the direction of Crinetics Pharmaceuticals i.e., Crinetics Pharmaceuticals and Scholar Rock go up and down completely randomly.

Pair Corralation between Crinetics Pharmaceuticals and Scholar Rock

Given the investment horizon of 90 days Crinetics Pharmaceuticals is expected to under-perform the Scholar Rock. But the stock apears to be less risky and, when comparing its historical volatility, Crinetics Pharmaceuticals is 1.21 times less risky than Scholar Rock. The stock trades about -0.08 of its potential returns per unit of risk. The Scholar Rock Holding is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest  1,523  in Scholar Rock Holding on February 3, 2024 and sell it today you would lose (27.00) from holding Scholar Rock Holding or give up 1.77% of portfolio value over 90 days.

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

Crinetics Pharmaceuticals  vs.  Scholar Rock Holding

Crinetics Pharmaceuticals

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Crinetics Pharmaceuticals are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unfluctuating basic indicators, Crinetics Pharmaceuticals showed solid returns over the last few months and may actually be approaching a breakup point.

Scholar Rock Holding

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Scholar Rock Holding are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent basic indicators, Scholar Rock is not utilizing all of its potentials. The recent stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Crinetics Pharmaceuticals and Scholar Rock

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

The idea behind Crinetics Pharmaceuticals and Scholar Rock Holding 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..