Correlation Between PepGen and Medical Facilities

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

By analyzing existing cross correlation between PepGen and Medical Facilities, you can compare the effects of market volatilities on PepGen and Medical Facilities 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 Medical Facilities. Check out your portfolio center. Please also check ongoing floating volatility patterns of PepGen and Medical Facilities.

Diversification Opportunities for PepGen and Medical Facilities

-0.53

Correlation Coefficient

PepGen  Medical Facilities

Excellent diversification

The 3 months correlation between PepGen and Medical is -0.53. Overlapping area represents the amount of risk that can be diversified away by holding PepGen and Medical Facilities in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Medical Facilities 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 Medical Facilities. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Medical Facilities has no effect on the direction of PepGen i.e., PepGen and Medical Facilities go up and down completely randomly.

Pair Corralation between PepGen and Medical Facilities

Given the investment horizon of 90 days PepGen is expected to under-perform the Medical Facilities. In addition to that, PepGen is 6.79 times more volatile than Medical Facilities. It trades about -0.04 of its total potential returns per unit of risk. Medical Facilities is currently generating about 0.03 per unit of volatility. If you would invest  1,079  in Medical Facilities on December 29, 2024 and sell it today you would earn a total of  32.00  from holding Medical Facilities or generate 2.97% return on investment over 90 days.

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

PepGen  vs.  Medical Facilities

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.

Medical Facilities

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Medical Facilities are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Medical Facilities is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with PepGen and Medical Facilities

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

The idea behind PepGen and Medical Facilities 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.