Correlation Between Gilead Sciences and Lipella Pharmaceuticals

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

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

Diversification Opportunities for Gilead Sciences and Lipella Pharmaceuticals

-0.51

Correlation Coefficient

Gilead Sciences  Lipella Pharmaceuticals

Excellent diversification

The 3 months correlation between Gilead and Lipella is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding Gilead Sciences and Lipella Pharmaceuticals Common in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lipella Pharmaceuticals and Gilead Sciences 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 Gilead Sciences are associated (or correlated) with Lipella Pharmaceuticals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lipella Pharmaceuticals has no effect on the direction of Gilead Sciences i.e., Gilead Sciences and Lipella Pharmaceuticals go up and down completely randomly.

Pair Corralation between Gilead Sciences and Lipella Pharmaceuticals

Given the investment horizon of 90 days Gilead Sciences is expected to generate 0.18 times more return on investment than Lipella Pharmaceuticals. However, Gilead Sciences is 5.65 times less risky than Lipella Pharmaceuticals. It trades about 0.18 of its potential returns per unit of risk. Lipella Pharmaceuticals Common is currently generating about 0.01 per unit of risk. If you would invest  7,896  in Gilead Sciences on August 31, 2024 and sell it today you would earn a total of  1,345  from holding Gilead Sciences or generate 17.03% return on investment over 90 days.

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

Gilead Sciences  vs.  Lipella Pharmaceuticals Common

Gilead Sciences

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Gilead Sciences are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady essential indicators, Gilead Sciences exhibited solid returns over the last few months and may actually be approaching a breakup point.

Lipella Pharmaceuticals

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Lipella Pharmaceuticals Common are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of very inconsistent basic indicators, Lipella Pharmaceuticals may actually be approaching a critical reversion point that can send shares even higher in December 2024.

Pair Trading with Gilead Sciences and Lipella Pharmaceuticals

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

The idea behind Gilead Sciences and Lipella Pharmaceuticals Common 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.