Correlation Between Equillium and Charles River

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

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

Diversification Opportunities for Equillium and Charles River

-0.33

Correlation Coefficient

Equillium  Charles River

Very good diversification

The 3 months correlation between Equillium and Charles is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding Equillium and Charles River Laboratories in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Charles River Labora and Equillium 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 Equillium are associated (or correlated) with Charles River. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Charles River Labora has no effect on the direction of Equillium i.e., Equillium and Charles River go up and down completely randomly.

Pair Corralation between Equillium and Charles River

Allowing for the 90-day total investment horizon Equillium is expected to under-perform the Charles River. In addition to that, Equillium is 3.25 times more volatile than Charles River Laboratories. It trades about -0.05 of its total potential returns per unit of risk. Charles River Laboratories is currently generating about -0.1 per unit of volatility. If you would invest  18,342  in Charles River Laboratories on December 29, 2024 and sell it today you would lose (2,787) from holding Charles River Laboratories or give up 15.19% of portfolio value over 90 days.

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

Equillium  vs.  Charles River Laboratories

Equillium

Risk-Adjusted Performance

Very Weak

Over the last 90 days Equillium has generated negative risk-adjusted returns adding no value to investors with long positions. Even with weak performance in the last few months, the Stock's basic indicators remain relatively invariable which may send shares a bit higher in April 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Charles River Labora

Risk-Adjusted Performance

Very Weak

Over the last 90 days Charles River Laboratories has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain quite persistent which may send shares a bit higher in April 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Pair Trading with Equillium and Charles River

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

The idea behind Equillium and Charles River Laboratories 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.