Correlation Between Geron and Rigel Pharmaceuticals

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

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

Diversification Opportunities for Geron and Rigel Pharmaceuticals

-0.42

Correlation Coefficient

Geron  Rigel Pharmaceuticals

Very good diversification

The 3 months correlation between Geron and Rigel is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding Geron and Rigel Pharmaceuticals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rigel Pharmaceuticals and Geron 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 Geron are associated (or correlated) with Rigel Pharmaceuticals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rigel Pharmaceuticals has no effect on the direction of Geron i.e., Geron and Rigel Pharmaceuticals go up and down completely randomly.

Pair Corralation between Geron and Rigel Pharmaceuticals

Given the investment horizon of 90 days Geron is expected to under-perform the Rigel Pharmaceuticals. In addition to that, Geron is 1.2 times more volatile than Rigel Pharmaceuticals. It trades about -0.19 of its total potential returns per unit of risk. Rigel Pharmaceuticals is currently generating about 0.06 per unit of volatility. If you would invest  1,647  in Rigel Pharmaceuticals on December 28, 2024 and sell it today you would earn a total of  192.00  from holding Rigel Pharmaceuticals or generate 11.66% return on investment over 90 days.

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

Geron  vs.  Rigel Pharmaceuticals

Geron

Risk-Adjusted Performance

Very Weak

Over the last 90 days Geron has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in April 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Rigel Pharmaceuticals

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Rigel Pharmaceuticals are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite quite unfluctuating technical and fundamental indicators, Rigel Pharmaceuticals disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Geron and Rigel Pharmaceuticals

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

The idea behind Geron and Rigel 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.