Correlation Between Greenwich Lifesciences and Mesoblast

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

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

Diversification Opportunities for Greenwich Lifesciences and Mesoblast

0.32

Correlation Coefficient

Greenwich Lifesciences  Mesoblast

Weak diversification

The 3 months correlation between Greenwich and Mesoblast is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding Greenwich Lifesciences and Mesoblast in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mesoblast and Greenwich Lifesciences 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 Greenwich Lifesciences are associated (or correlated) with Mesoblast. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mesoblast has no effect on the direction of Greenwich Lifesciences i.e., Greenwich Lifesciences and Mesoblast go up and down completely randomly.

Pair Corralation between Greenwich Lifesciences and Mesoblast

Given the investment horizon of 90 days Greenwich Lifesciences is expected to generate 0.64 times more return on investment than Mesoblast. However, Greenwich Lifesciences is 1.56 times less risky than Mesoblast. It trades about -0.04 of its potential returns per unit of risk. Mesoblast is currently generating about -0.06 per unit of risk. If you would invest  1,216  in Greenwich Lifesciences on December 23, 2024 and sell it today you would lose (105.00) from holding Greenwich Lifesciences or give up 8.63% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	96.72%
Values	Daily Returns

Greenwich Lifesciences  vs.  Mesoblast

Greenwich Lifesciences

Risk-Adjusted Performance

Very Weak

Over the last 90 days Greenwich Lifesciences has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest inconsistent performance, the Stock's basic indicators remain strong and the recent confusion on Wall Street may also be a sign of long-lasting gains for the firm traders.

Mesoblast

Risk-Adjusted Performance

Very Weak

Over the last 90 days Mesoblast has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of inconsistent 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.

Pair Trading with Greenwich Lifesciences and Mesoblast

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

The idea behind Greenwich Lifesciences and Mesoblast 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.