Correlation Between Innovent Biologics and Telix Pharmaceuticals

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

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

Diversification Opportunities for Innovent Biologics and Telix Pharmaceuticals

-0.21

Correlation Coefficient

Innovent Biologics  Telix Pharmaceuticals

Very good diversification

The 3 months correlation between Innovent and Telix is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding Innovent Biologics and Telix Pharmaceuticals Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Telix Pharmaceuticals and Innovent Biologics 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 Innovent Biologics are associated (or correlated) with Telix Pharmaceuticals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Telix Pharmaceuticals has no effect on the direction of Innovent Biologics i.e., Innovent Biologics and Telix Pharmaceuticals go up and down completely randomly.

Pair Corralation between Innovent Biologics and Telix Pharmaceuticals

Assuming the 90 days horizon Innovent Biologics is expected to under-perform the Telix Pharmaceuticals. In addition to that, Innovent Biologics is 1.07 times more volatile than Telix Pharmaceuticals Limited. It trades about -0.02 of its total potential returns per unit of risk. Telix Pharmaceuticals Limited is currently generating about 0.17 per unit of volatility. If you would invest  1,170  in Telix Pharmaceuticals Limited on September 4, 2024 and sell it today you would earn a total of  466.00  from holding Telix Pharmaceuticals Limited or generate 39.83% return on investment over 90 days.

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

Innovent Biologics  vs.  Telix Pharmaceuticals Limited

Innovent Biologics

Risk-Adjusted Performance

0 of 100

Very Weak

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

Telix Pharmaceuticals

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Telix Pharmaceuticals Limited are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite nearly inconsistent basic indicators, Telix Pharmaceuticals reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Innovent Biologics and Telix Pharmaceuticals

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

The idea behind Innovent Biologics and Telix Pharmaceuticals Limited 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 Anywhere module to track or share privately all of your investments from the convenience of any device.