Correlation Between CureVac NV and Abcellera Biologics

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

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

Diversification Opportunities for CureVac NV and Abcellera Biologics

0.61

Correlation Coefficient

CureVac NV  Abcellera Biologics

Poor diversification

The 3 months correlation between CureVac and Abcellera is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding CureVac NV and Abcellera Biologics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Abcellera Biologics and CureVac NV 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 CureVac NV are associated (or correlated) with Abcellera Biologics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Abcellera Biologics has no effect on the direction of CureVac NV i.e., CureVac NV and Abcellera Biologics go up and down completely randomly.

Pair Corralation between CureVac NV and Abcellera Biologics

Given the investment horizon of 90 days CureVac NV is expected to generate 1.17 times more return on investment than Abcellera Biologics. However, CureVac NV is 1.17 times more volatile than Abcellera Biologics. It trades about 0.06 of its potential returns per unit of risk. Abcellera Biologics is currently generating about 0.01 per unit of risk. If you would invest  287.00  in CureVac NV on November 29, 2024 and sell it today you would earn a total of  34.00  from holding CureVac NV or generate 11.85% return on investment over 90 days.

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

CureVac NV  vs.  Abcellera Biologics

CureVac NV

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in CureVac NV are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of rather fragile basic indicators, CureVac NV exhibited solid returns over the last few months and may actually be approaching a breakup point.

Abcellera Biologics

Risk-Adjusted Performance

Very Weak

Over the last 90 days Abcellera Biologics has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent fundamental indicators, Abcellera Biologics is not utilizing all of its potentials. The current stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with CureVac NV and Abcellera Biologics

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

The idea behind CureVac NV and Abcellera Biologics 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.