Correlation Between Gilead Sciences and Scorpius Holdings

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

By analyzing existing cross correlation between Gilead Sciences and Scorpius Holdings, you can compare the effects of market volatilities on Gilead Sciences and Scorpius Holdings 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 Scorpius Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gilead Sciences and Scorpius Holdings.

Diversification Opportunities for Gilead Sciences and Scorpius Holdings

-0.5

Correlation Coefficient

Gilead Sciences  Scorpius Holdings

Very good diversification

The 3 months correlation between Gilead and Scorpius is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding Gilead Sciences and Scorpius Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Scorpius Holdings 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 Scorpius Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Scorpius Holdings has no effect on the direction of Gilead Sciences i.e., Gilead Sciences and Scorpius Holdings go up and down completely randomly.

Pair Corralation between Gilead Sciences and Scorpius Holdings

Given the investment horizon of 90 days Gilead Sciences is expected to under-perform the Scorpius Holdings. But the stock apears to be less risky and, when comparing its historical volatility, Gilead Sciences is 14.8 times less risky than Scorpius Holdings. The stock trades about -0.05 of its potential returns per unit of risk. The Scorpius Holdings is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest  46.00  in Scorpius Holdings on October 6, 2024 and sell it today you would earn a total of  9.00  from holding Scorpius Holdings or generate 19.57% 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.  Scorpius Holdings

Gilead Sciences

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Gilead Sciences are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of rather unfluctuating essential indicators, Gilead Sciences may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Scorpius Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Scorpius Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, Scorpius Holdings is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Gilead Sciences and Scorpius Holdings

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

The idea behind Gilead Sciences and Scorpius Holdings 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.