Correlation Between Anavex Life and Greenwich Lifesciences

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

By analyzing existing cross correlation between Anavex Life Sciences and Greenwich Lifesciences, you can compare the effects of market volatilities on Anavex Life and Greenwich Lifesciences 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 Anavex Life with a short position of Greenwich Lifesciences. Check out your portfolio center. Please also check ongoing floating volatility patterns of Anavex Life and Greenwich Lifesciences.

Diversification Opportunities for Anavex Life and Greenwich Lifesciences

-0.51

Correlation Coefficient

Anavex Life  Greenwich Lifesciences

Excellent diversification

The 3 months correlation between Anavex and Greenwich is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding Anavex Life Sciences and Greenwich Lifesciences in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Greenwich Lifesciences and Anavex Life 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 Anavex Life Sciences are associated (or correlated) with Greenwich Lifesciences. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Greenwich Lifesciences has no effect on the direction of Anavex Life i.e., Anavex Life and Greenwich Lifesciences go up and down completely randomly.

Pair Corralation between Anavex Life and Greenwich Lifesciences

Given the investment horizon of 90 days Anavex Life Sciences is expected to under-perform the Greenwich Lifesciences. In addition to that, Anavex Life is 1.91 times more volatile than Greenwich Lifesciences. It trades about -0.05 of its total potential returns per unit of risk. Greenwich Lifesciences is currently generating about 0.02 per unit of volatility. If you would invest  1,216  in Greenwich Lifesciences on October 24, 2024 and sell it today you would earn a total of  0.00  from holding Greenwich Lifesciences or generate 0.0% return on investment over 90 days.

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

Anavex Life Sciences  vs.  Greenwich Lifesciences

Anavex Life Sciences

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Anavex Life Sciences are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite quite weak basic indicators, Anavex Life disclosed solid returns over the last few months and may actually be approaching a breakup point.

Greenwich Lifesciences

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Greenwich Lifesciences has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest inconsistent performance, the Stock's basic indicators remain strong and the recent confusion on Wall Street may also be a sign of long-lasting gains for the firm traders.

Pair Trading with Anavex Life and Greenwich Lifesciences

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

The idea behind Anavex Life Sciences and Greenwich Lifesciences 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.