Correlation Between Celltrion Pharm and Medy Tox

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

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

Diversification Opportunities for Celltrion Pharm and Medy Tox

0.9

Correlation Coefficient

Celltrion Pharm  Medy Tox

Almost no diversification

The 3 months correlation between Celltrion and Medy is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Celltrion Pharm and Medy Tox in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Medy Tox 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 Medy Tox. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Medy Tox has no effect on the direction of Celltrion Pharm i.e., Celltrion Pharm and Medy Tox go up and down completely randomly.

Pair Corralation between Celltrion Pharm and Medy Tox

Assuming the 90 days trading horizon Celltrion Pharm is expected to generate 0.92 times more return on investment than Medy Tox. However, Celltrion Pharm is 1.09 times less risky than Medy Tox. It trades about 0.21 of its potential returns per unit of risk. Medy Tox is currently generating about -0.01 per unit of risk. If you would invest  5,250,000  in Celltrion Pharm on September 25, 2024 and sell it today you would earn a total of  990,000  from holding Celltrion Pharm or generate 18.86% return on investment over 90 days.

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

Celltrion Pharm  vs.  Medy Tox

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 latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Medy Tox

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Medy Tox 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 Medy Tox

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

The idea behind Celltrion Pharm and Medy Tox 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.