Correlation Between Celltrion Pharm and MedPacto

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

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

Diversification Opportunities for Celltrion Pharm and MedPacto

0.86

Correlation Coefficient

Celltrion Pharm  MedPacto

Very poor diversification

The 3 months correlation between Celltrion and MedPacto is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Celltrion Pharm and MedPacto in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MedPacto and Celltrion Pharm 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 Celltrion Pharm are associated (or correlated) with MedPacto. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MedPacto has no effect on the direction of Celltrion Pharm i.e., Celltrion Pharm and MedPacto go up and down completely randomly.

Pair Corralation between Celltrion Pharm and MedPacto

Assuming the 90 days trading horizon Celltrion Pharm is expected to generate 0.89 times more return on investment than MedPacto. However, Celltrion Pharm is 1.13 times less risky than MedPacto. It trades about 0.1 of its potential returns per unit of risk. MedPacto is currently generating about -0.03 per unit of risk. If you would invest  5,560,000  in Celltrion Pharm on September 23, 2024 and sell it today you would earn a total of  420,000  from holding Celltrion Pharm or generate 7.55% return on investment over 90 days.

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

Celltrion Pharm  vs.  MedPacto

Celltrion Pharm

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Celltrion Pharm has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

MedPacto

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days MedPacto has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Celltrion Pharm and MedPacto

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

The idea behind Celltrion Pharm and MedPacto 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.