Correlation Between Humacyte and Roivant Sciences

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

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

Diversification Opportunities for Humacyte and Roivant Sciences

0.32

Correlation Coefficient

Humacyte  Roivant Sciences

Weak diversification

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

Pair Corralation between Humacyte and Roivant Sciences

Assuming the 90 days horizon Humacyte is expected to under-perform the Roivant Sciences. In addition to that, Humacyte is 4.35 times more volatile than Roivant Sciences. It trades about -0.23 of its total potential returns per unit of risk. Roivant Sciences is currently generating about -0.07 per unit of volatility. If you would invest  1,143  in Roivant Sciences on December 30, 2024 and sell it today you would lose (105.00) from holding Roivant Sciences or give up 9.19% of portfolio value over 90 days.

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

Humacyte  vs.  Roivant Sciences

Humacyte

Risk-Adjusted Performance

Very Weak

Over the last 90 days Humacyte 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 basic indicators remain fairly stable which may send shares a bit higher in April 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Roivant Sciences

Risk-Adjusted Performance

Very Weak

Over the last 90 days Roivant Sciences has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's forward indicators remain stable and the latest fuss on Wall Street may also be a sign of long-term gains for the venture sophisticated investors.

Pair Trading with Humacyte and Roivant Sciences

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

The idea behind Humacyte and Roivant 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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.