Correlation Between Celltrion Pharm and SK Bioscience

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

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

Diversification Opportunities for Celltrion Pharm and SK Bioscience

0.69

Correlation Coefficient

Celltrion Pharm  SK Bioscience

Poor diversification

The 3 months correlation between Celltrion and 302440 is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Celltrion Pharm and SK Bioscience Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SK Bioscience 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 SK Bioscience. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SK Bioscience has no effect on the direction of Celltrion Pharm i.e., Celltrion Pharm and SK Bioscience go up and down completely randomly.

Pair Corralation between Celltrion Pharm and SK Bioscience

Assuming the 90 days trading horizon Celltrion Pharm is expected to under-perform the SK Bioscience. But the stock apears to be less risky and, when comparing its historical volatility, Celltrion Pharm is 1.26 times less risky than SK Bioscience. The stock trades about -0.07 of its potential returns per unit of risk. The SK Bioscience Co is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest  5,350,000  in SK Bioscience Co on October 1, 2024 and sell it today you would lose (355,000) from holding SK Bioscience Co or give up 6.64% of portfolio value over 90 days.

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

Celltrion Pharm  vs.  SK Bioscience Co

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.

SK Bioscience

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days SK Bioscience Co has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, SK Bioscience 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 SK Bioscience

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

The idea behind Celltrion Pharm and SK Bioscience 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.

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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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.