Correlation Between Vaxcyte and Apellis Pharmaceuticals

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

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

Diversification Opportunities for Vaxcyte and Apellis Pharmaceuticals

-0.71

Correlation Coefficient

Vaxcyte  Apellis Pharmaceuticals

Pay attention - limited upside

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

Pair Corralation between Vaxcyte and Apellis Pharmaceuticals

Given the investment horizon of 90 days Vaxcyte is expected to under-perform the Apellis Pharmaceuticals. In addition to that, Vaxcyte is 1.1 times more volatile than Apellis Pharmaceuticals. It trades about -0.16 of its total potential returns per unit of risk. Apellis Pharmaceuticals is currently generating about -0.04 per unit of volatility. If you would invest  3,502  in Apellis Pharmaceuticals on October 8, 2024 and sell it today you would lose (64.00) from holding Apellis Pharmaceuticals or give up 1.83% of portfolio value over 90 days.

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

Vaxcyte  vs.  Apellis Pharmaceuticals

Vaxcyte

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Vaxcyte has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Apellis Pharmaceuticals

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Apellis Pharmaceuticals are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak essential indicators, Apellis Pharmaceuticals unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Vaxcyte and Apellis Pharmaceuticals

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

The idea behind Vaxcyte and Apellis Pharmaceuticals 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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.