Correlation Between Health Sciences and Living Cell

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

By analyzing existing cross correlation between Health Sciences Gr and Living Cell Technologies, you can compare the effects of market volatilities on Health Sciences and Living Cell 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 Health Sciences with a short position of Living Cell. Check out your portfolio center. Please also check ongoing floating volatility patterns of Health Sciences and Living Cell.

Diversification Opportunities for Health Sciences and Living Cell

0.0

Correlation Coefficient

Health Sciences  Living Cell

Pay attention - limited upside

The 3 months correlation between Health and Living is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Health Sciences Gr and Living Cell Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Living Cell Technologies and Health 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 Health Sciences Gr are associated (or correlated) with Living Cell. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Living Cell Technologies has no effect on the direction of Health Sciences i.e., Health Sciences and Living Cell go up and down completely randomly.

Pair Corralation between Health Sciences and Living Cell

If you would invest  0.16  in Living Cell Technologies on December 28, 2024 and sell it today you would earn a total of  0.24  from holding Living Cell Technologies or generate 150.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	93.65%
Values	Daily Returns

Health Sciences Gr  vs.  Living Cell Technologies

Health Sciences Gr

Risk-Adjusted Performance

Very Weak

Over the last 90 days Health Sciences Gr has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Health Sciences is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Living Cell Technologies

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Living Cell Technologies are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak essential indicators, Living Cell reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Health Sciences and Living Cell

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

The idea behind Health Sciences Gr and Living Cell Technologies 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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.