Correlation Between Intracellular and Teva Pharma

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

By analyzing existing cross correlation between Intracellular Th and Teva Pharma Industries, you can compare the effects of market volatilities on Intracellular and Teva Pharma 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 Teva Pharma. Check out your portfolio center. Please also check ongoing floating volatility patterns of Intracellular and Teva Pharma.

Diversification Opportunities for Intracellular and Teva Pharma

-0.7

Correlation Coefficient

Intracellular  Teva Pharma

Excellent diversification

The 3 months correlation between Intracellular and Teva is -0.7. Overlapping area represents the amount of risk that can be diversified away by holding Intracellular Th and Teva Pharma Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Teva Pharma Industries 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 Teva Pharma. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Teva Pharma Industries has no effect on the direction of Intracellular i.e., Intracellular and Teva Pharma go up and down completely randomly.

Pair Corralation between Intracellular and Teva Pharma

Given the investment horizon of 90 days Intracellular Th is expected to generate 1.67 times more return on investment than Teva Pharma. However, Intracellular is 1.67 times more volatile than Teva Pharma Industries. It trades about 0.18 of its potential returns per unit of risk. Teva Pharma Industries is currently generating about -0.21 per unit of risk. If you would invest  8,348  in Intracellular Th on December 30, 2024 and sell it today you would earn a total of  4,833  from holding Intracellular Th or generate 57.89% return on investment over 90 days.

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

Intracellular Th  vs.  Teva Pharma Industries

Intracellular Th

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Intracellular Th are ranked lower than 13 (%) 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.

Teva Pharma Industries

Risk-Adjusted Performance

Very Weak

Over the last 90 days Teva Pharma Industries has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unfluctuating 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.

Pair Trading with Intracellular and Teva Pharma

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

The idea behind Intracellular Th and Teva Pharma Industries 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.