Correlation Between Lineage Cell and Compugen

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

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

Diversification Opportunities for Lineage Cell and Compugen

0.8

Correlation Coefficient

Lineage Cell  Compugen

Very poor diversification

The 3 months correlation between Lineage and Compugen is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Lineage Cell Therapeutics and Compugen in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Compugen and Lineage Cell 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 Lineage Cell Therapeutics are associated (or correlated) with Compugen. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Compugen has no effect on the direction of Lineage Cell i.e., Lineage Cell and Compugen go up and down completely randomly.

Pair Corralation between Lineage Cell and Compugen

Assuming the 90 days trading horizon Lineage Cell Therapeutics is expected to generate 0.97 times more return on investment than Compugen. However, Lineage Cell Therapeutics is 1.03 times less risky than Compugen. It trades about 0.02 of its potential returns per unit of risk. Compugen is currently generating about 0.02 per unit of risk. If you would invest  18,020  in Lineage Cell Therapeutics on December 30, 2024 and sell it today you would lose (230.00) from holding Lineage Cell Therapeutics or give up 1.28% of portfolio value over 90 days.

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

Lineage Cell Therapeutics  vs.  Compugen

Lineage Cell Therapeutics

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Lineage Cell Therapeutics are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Lineage Cell is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Compugen

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Compugen are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Compugen is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Lineage Cell and Compugen

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

The idea behind Lineage Cell Therapeutics and Compugen 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 Transaction History module to view history of all your transactions and understand their impact on performance.