Correlation Between HCW Biologics and Sellas Life

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

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

Diversification Opportunities for HCW Biologics and Sellas Life

0.21

Correlation Coefficient

HCW Biologics  Sellas Life

Modest diversification

The 3 months correlation between HCW and Sellas is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding HCW Biologics and Sellas Life Sciences in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sellas Life Sciences and HCW Biologics 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 HCW Biologics are associated (or correlated) with Sellas Life. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sellas Life Sciences has no effect on the direction of HCW Biologics i.e., HCW Biologics and Sellas Life go up and down completely randomly.

Pair Corralation between HCW Biologics and Sellas Life

Given the investment horizon of 90 days HCW Biologics is expected to generate 13.07 times more return on investment than Sellas Life. However, HCW Biologics is 13.07 times more volatile than Sellas Life Sciences. It trades about 0.06 of its potential returns per unit of risk. Sellas Life Sciences is currently generating about -0.1 per unit of risk. If you would invest  61.00  in HCW Biologics on September 13, 2024 and sell it today you would lose (21.00) from holding HCW Biologics or give up 34.43% of portfolio value over 90 days.

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

HCW Biologics  vs.  Sellas Life Sciences

HCW Biologics

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in HCW Biologics are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, HCW Biologics sustained solid returns over the last few months and may actually be approaching a breakup point.

Sellas Life Sciences

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sellas Life Sciences 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 essential indicators remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with HCW Biologics and Sellas Life

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

The idea behind HCW Biologics and Sellas Life Sciences 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.