Correlation Between Legend Biotech and Replimune

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

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

Diversification Opportunities for Legend Biotech and Replimune

0.54

Correlation Coefficient

Legend Biotech  Replimune

Very weak diversification

The 3 months correlation between Legend and Replimune is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding Legend Biotech Corp and Replimune Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Replimune Group and Legend Biotech 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 Legend Biotech Corp are associated (or correlated) with Replimune. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Replimune Group has no effect on the direction of Legend Biotech i.e., Legend Biotech and Replimune go up and down completely randomly.

Pair Corralation between Legend Biotech and Replimune

Given the investment horizon of 90 days Legend Biotech Corp is expected to generate 0.8 times more return on investment than Replimune. However, Legend Biotech Corp is 1.24 times less risky than Replimune. It trades about 0.05 of its potential returns per unit of risk. Replimune Group is currently generating about -0.05 per unit of risk. If you would invest  3,277  in Legend Biotech Corp on December 29, 2024 and sell it today you would earn a total of  229.00  from holding Legend Biotech Corp or generate 6.99% return on investment over 90 days.

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

Legend Biotech Corp  vs.  Replimune Group

Legend Biotech Corp

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Legend Biotech Corp are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of very weak technical and fundamental indicators, Legend Biotech may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Replimune Group

Risk-Adjusted Performance

Very Weak

Over the last 90 days Replimune Group 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 quite persistent which may send shares a bit higher in April 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Pair Trading with Legend Biotech and Replimune

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

The idea behind Legend Biotech Corp and Replimune Group 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.