Correlation Between ALTEOGEN and Celltrion Pharm

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Can any of the company-specific risk be diversified away by investing in both ALTEOGEN and Celltrion Pharm 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 ALTEOGEN and Celltrion Pharm into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ALTEOGEN and Celltrion Pharm, you can compare the effects of market volatilities on ALTEOGEN and Celltrion Pharm 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 ALTEOGEN with a short position of Celltrion Pharm. Check out your portfolio center. Please also check ongoing floating volatility patterns of ALTEOGEN and Celltrion Pharm.

Diversification Opportunities for ALTEOGEN and Celltrion Pharm

ALTEOGENCelltrionDiversified AwayALTEOGENCelltrionDiversified Away100%
0.18
  Correlation Coefficient

Average diversification

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

Pair Corralation between ALTEOGEN and Celltrion Pharm

Assuming the 90 days trading horizon ALTEOGEN is expected to under-perform the Celltrion Pharm. In addition to that, ALTEOGEN is 1.68 times more volatile than Celltrion Pharm. It trades about -0.04 of its total potential returns per unit of risk. Celltrion Pharm is currently generating about -0.04 per unit of volatility. If you would invest  6,371,429  in Celltrion Pharm on October 12, 2024 and sell it today you would lose (611,429) from holding Celltrion Pharm or give up 9.6% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthInsignificant
Accuracy98.39%
ValuesDaily Returns

ALTEOGEN  vs.  Celltrion Pharm

 Performance 
JavaScript chart by amCharts 3.21.15OctNovDec -20-10010203040
JavaScript chart by amCharts 3.21.15196170 068760
       Timeline  
ALTEOGEN 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days ALTEOGEN 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.
JavaScript chart by amCharts 3.21.15NovDecJanDecJan300,000350,000400,000450,000
Celltrion Pharm 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
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.
JavaScript chart by amCharts 3.21.15NovDecJanDecJan50,00055,00060,00065,000

ALTEOGEN and Celltrion Pharm Volatility Contrast

   Predicted Return Density   
JavaScript chart by amCharts 3.21.15-8.56-6.41-4.26-2.11-0.03581.974.046.128.1910.27 0.0150.0200.0250.0300.0350.040
JavaScript chart by amCharts 3.21.15196170 068760
       Returns  

Pair Trading with ALTEOGEN and Celltrion Pharm

The main advantage of trading using opposite ALTEOGEN and Celltrion Pharm positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ALTEOGEN position performs unexpectedly, Celltrion Pharm 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 Celltrion Pharm will offset losses from the drop in Celltrion Pharm's long position.
The idea behind ALTEOGEN and Celltrion Pharm 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.
The effect of pair diversification on risk is to reduce it, but we should note this doesn't apply to all risk types. When we trade pairs against Celltrion Pharm as a counterpart, there is always some inherent risk that will never be diversified away no matter what. This volatility limits the effect of tactical diversification using pair trading. Celltrion Pharm's systematic risk is the inherent uncertainty of the entire market, and therefore cannot be mitigated even by pair-trading it against the equity that is not highly correlated to it. On the other hand, Celltrion Pharm's unsystematic risk describes the types of risk that we can protect against, at least to some degree, by selecting a matching pair that is not perfectly correlated to Celltrion Pharm.
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 CEOs Directory module to screen CEOs from public companies around the world.

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