Correlation Between Center Laboratories and Adimmune Corp

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

By analyzing existing cross correlation between Center Laboratories and Adimmune Corp, you can compare the effects of market volatilities on Center Laboratories and Adimmune Corp 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 Center Laboratories with a short position of Adimmune Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Center Laboratories and Adimmune Corp.

Diversification Opportunities for Center Laboratories and Adimmune Corp

0.63

Correlation Coefficient

Center Laboratories  Adimmune Corp

Poor diversification

The 3 months correlation between Center and Adimmune is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Center Laboratories and Adimmune Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Adimmune Corp and Center Laboratories 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 Center Laboratories are associated (or correlated) with Adimmune Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Adimmune Corp has no effect on the direction of Center Laboratories i.e., Center Laboratories and Adimmune Corp go up and down completely randomly.

Pair Corralation between Center Laboratories and Adimmune Corp

Assuming the 90 days trading horizon Center Laboratories is expected to generate 1.25 times more return on investment than Adimmune Corp. However, Center Laboratories is 1.25 times more volatile than Adimmune Corp. It trades about -0.04 of its potential returns per unit of risk. Adimmune Corp is currently generating about -0.29 per unit of risk. If you would invest  4,615  in Center Laboratories on October 9, 2024 and sell it today you would lose (280.00) from holding Center Laboratories or give up 6.07% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.41%
Values	Daily Returns

Center Laboratories  vs.  Adimmune Corp

Center Laboratories

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Center Laboratories has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Center Laboratories is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Adimmune Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Adimmune Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of abnormal performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in February 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Pair Trading with Center Laboratories and Adimmune Corp

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

The idea behind Center Laboratories and Adimmune Corp 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.