Correlation Between PepGen and Covalon Technologies

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

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

Diversification Opportunities for PepGen and Covalon Technologies

0.32

Correlation Coefficient

PepGen  Covalon Technologies

Weak diversification

The 3 months correlation between PepGen and Covalon is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding PepGen and Covalon Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Covalon Technologies and PepGen 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 PepGen are associated (or correlated) with Covalon Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Covalon Technologies has no effect on the direction of PepGen i.e., PepGen and Covalon Technologies go up and down completely randomly.

Pair Corralation between PepGen and Covalon Technologies

Given the investment horizon of 90 days PepGen is expected to generate 4.24 times more return on investment than Covalon Technologies. However, PepGen is 4.24 times more volatile than Covalon Technologies. It trades about -0.04 of its potential returns per unit of risk. Covalon Technologies is currently generating about -0.15 per unit of risk. If you would invest  383.00  in PepGen on December 29, 2024 and sell it today you would lose (222.00) from holding PepGen or give up 57.96% of portfolio value over 90 days.

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

PepGen  vs.  Covalon Technologies

PepGen

Risk-Adjusted Performance

Very Weak

Over the last 90 days PepGen has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Covalon Technologies

Risk-Adjusted Performance

Very Weak

Over the last 90 days Covalon Technologies has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's essential indicators remain nearly stable which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with PepGen and Covalon Technologies

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

The idea behind PepGen and Covalon Technologies 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.

Check out your portfolio center.

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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.