Correlation Between Mallinckrodt Plc and Assertio Therapeutics

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

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

Diversification Opportunities for Mallinckrodt Plc and Assertio Therapeutics

0.71

Correlation Coefficient

Mallinckrodt Plc  Assertio Therapeutics

Poor diversification

The 3 months correlation between Mallinckrodt and Assertio is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Mallinckrodt Plc and Assertio Therapeutics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Assertio Therapeutics and Mallinckrodt Plc 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 Mallinckrodt Plc are associated (or correlated) with Assertio Therapeutics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Assertio Therapeutics has no effect on the direction of Mallinckrodt Plc i.e., Mallinckrodt Plc and Assertio Therapeutics go up and down completely randomly.

Pair Corralation between Mallinckrodt Plc and Assertio Therapeutics

If you would invest  46.00  in Mallinckrodt Plc on September 3, 2024 and sell it today you would earn a total of  0.00  from holding Mallinckrodt Plc or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	5.0%
Values	Daily Returns

Mallinckrodt Plc  vs.  Assertio Therapeutics

Mallinckrodt Plc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Mallinckrodt Plc has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent basic indicators, Mallinckrodt Plc is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Assertio Therapeutics

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Assertio Therapeutics has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Assertio Therapeutics is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Mallinckrodt Plc and Assertio Therapeutics

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

The idea behind Mallinckrodt Plc and Assertio Therapeutics 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.