Correlation Between Covalon Technologies and PhaseBio Pharmaceuticals

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

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

Diversification Opportunities for Covalon Technologies and PhaseBio Pharmaceuticals

0.06

Correlation Coefficient

Covalon Technologies  PhaseBio Pharmaceuticals

Significant diversification

The 3 months correlation between Covalon and PhaseBio is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding Covalon Technologies and PhaseBio Pharmaceuticals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PhaseBio Pharmaceuticals and Covalon Technologies 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 Covalon Technologies are associated (or correlated) with PhaseBio Pharmaceuticals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PhaseBio Pharmaceuticals has no effect on the direction of Covalon Technologies i.e., Covalon Technologies and PhaseBio Pharmaceuticals go up and down completely randomly.

Pair Corralation between Covalon Technologies and PhaseBio Pharmaceuticals

If you would invest  220.00  in Covalon Technologies on September 12, 2024 and sell it today you would earn a total of  34.00  from holding Covalon Technologies or generate 15.45% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	1.59%
Values	Daily Returns

Covalon Technologies  vs.  PhaseBio Pharmaceuticals

Covalon Technologies

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Covalon Technologies are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile essential indicators, Covalon Technologies reported solid returns over the last few months and may actually be approaching a breakup point.

PhaseBio Pharmaceuticals

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days PhaseBio Pharmaceuticals has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, PhaseBio Pharmaceuticals is not utilizing all of its potentials. The current stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Covalon Technologies and PhaseBio Pharmaceuticals

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

The idea behind Covalon Technologies and PhaseBio Pharmaceuticals 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.