Correlation Between Hepion Pharmaceuticals and Novavax

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

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

Diversification Opportunities for Hepion Pharmaceuticals and Novavax

0.61

Correlation Coefficient

Hepion Pharmaceuticals  Novavax

Poor diversification

The 3 months correlation between Hepion and Novavax is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Hepion Pharmaceuticals and Novavax in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Novavax and Hepion Pharmaceuticals 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 Hepion Pharmaceuticals are associated (or correlated) with Novavax. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Novavax has no effect on the direction of Hepion Pharmaceuticals i.e., Hepion Pharmaceuticals and Novavax go up and down completely randomly.

Pair Corralation between Hepion Pharmaceuticals and Novavax

Given the investment horizon of 90 days Hepion Pharmaceuticals is expected to under-perform the Novavax. In addition to that, Hepion Pharmaceuticals is 3.41 times more volatile than Novavax. It trades about -0.26 of its total potential returns per unit of risk. Novavax is currently generating about -0.02 per unit of volatility. If you would invest  793.00  in Novavax on December 29, 2024 and sell it today you would lose (93.00) from holding Novavax or give up 11.73% of portfolio value over 90 days.

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

Hepion Pharmaceuticals  vs.  Novavax

Hepion Pharmaceuticals

Risk-Adjusted Performance

Very Weak

Over the last 90 days Hepion Pharmaceuticals has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Novavax

Risk-Adjusted Performance

Very Weak

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

Pair Trading with Hepion Pharmaceuticals and Novavax

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

The idea behind Hepion Pharmaceuticals and Novavax 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.