Correlation Between Celltrion and I-Components

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

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

Diversification Opportunities for Celltrion and I-Components

0.18

Correlation Coefficient

Celltrion  I-Components

Average diversification

The 3 months correlation between Celltrion and I-Components is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding Celltrion and i Components Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on i Components and Celltrion 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 are associated (or correlated) with I-Components. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of i Components has no effect on the direction of Celltrion i.e., Celltrion and I-Components go up and down completely randomly.

Pair Corralation between Celltrion and I-Components

Assuming the 90 days trading horizon Celltrion is expected to generate 0.78 times more return on investment than I-Components. However, Celltrion is 1.28 times less risky than I-Components. It trades about 0.03 of its potential returns per unit of risk. i Components Co is currently generating about -0.02 per unit of risk. If you would invest  16,256,800  in Celltrion on September 26, 2024 and sell it today you would earn a total of  3,183,200  from holding Celltrion or generate 19.58% return on investment over 90 days.

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

Celltrion  vs.  i Components Co

Celltrion

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Celltrion has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Celltrion is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

i Components

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days i Components Co has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, I-Components is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Celltrion and I-Components

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

The idea behind Celltrion and i Components Co 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.

Check out your portfolio center.

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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.