Correlation Between Celltrion Pharm and DIO

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

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

Diversification Opportunities for Celltrion Pharm and DIO

0.09

Correlation Coefficient

Celltrion Pharm  DIO

Significant diversification

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

Pair Corralation between Celltrion Pharm and DIO

Assuming the 90 days trading horizon Celltrion Pharm is expected to generate 2.07 times more return on investment than DIO. However, Celltrion Pharm is 2.07 times more volatile than DIO Corporation. It trades about 0.1 of its potential returns per unit of risk. DIO Corporation is currently generating about -0.1 per unit of risk. If you would invest  5,560,000  in Celltrion Pharm on September 22, 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	Insignificant
Accuracy	100.0%
Values	Daily Returns

Celltrion Pharm  vs.  DIO Corp.

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.

DIO Corporation

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days DIO Corporation has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, DIO 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 Pharm and DIO

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

The idea behind Celltrion Pharm and DIO Corporation 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.