Correlation Between Intracellular and Rockwell Medical

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

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

Diversification Opportunities for Intracellular and Rockwell Medical

-0.17

Correlation Coefficient

Intracellular  Rockwell Medical

Good diversification

The 3 months correlation between Intracellular and Rockwell is -0.17. Overlapping area represents the amount of risk that can be diversified away by holding Intracellular Th and Rockwell Medical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rockwell Medical and Intracellular 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 Intracellular Th are associated (or correlated) with Rockwell Medical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rockwell Medical has no effect on the direction of Intracellular i.e., Intracellular and Rockwell Medical go up and down completely randomly.

Pair Corralation between Intracellular and Rockwell Medical

Given the investment horizon of 90 days Intracellular Th is expected to generate 0.31 times more return on investment than Rockwell Medical. However, Intracellular Th is 3.26 times less risky than Rockwell Medical. It trades about 0.13 of its potential returns per unit of risk. Rockwell Medical is currently generating about -0.05 per unit of risk. If you would invest  7,300  in Intracellular Th on August 31, 2024 and sell it today you would earn a total of  1,265  from holding Intracellular Th or generate 17.33% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.44%
Values	Daily Returns

Intracellular Th  vs.  Rockwell Medical

Intracellular Th

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Intracellular Th are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite fairly uncertain fundamental indicators, Intracellular demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Rockwell Medical

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Rockwell Medical 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 fairly strong which may send shares a bit higher in December 2024. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Pair Trading with Intracellular and Rockwell Medical

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

The idea behind Intracellular Th and Rockwell Medical 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.