Correlation Between Regeneron Pharmaceuticals and GB Sciences

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

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

Diversification Opportunities for Regeneron Pharmaceuticals and GB Sciences

0.3

Correlation Coefficient

Regeneron Pharmaceuticals  GB Sciences

Weak diversification

The 3 months correlation between Regeneron and GBLX is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding Regeneron Pharmaceuticals and GB Sciences in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GB Sciences and Regeneron Pharmaceuticals 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 Regeneron Pharmaceuticals are associated (or correlated) with GB Sciences. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GB Sciences has no effect on the direction of Regeneron Pharmaceuticals i.e., Regeneron Pharmaceuticals and GB Sciences go up and down completely randomly.

Pair Corralation between Regeneron Pharmaceuticals and GB Sciences

Given the investment horizon of 90 days Regeneron Pharmaceuticals is expected to under-perform the GB Sciences. But the stock apears to be less risky and, when comparing its historical volatility, Regeneron Pharmaceuticals is 27.57 times less risky than GB Sciences. The stock trades about -0.07 of its potential returns per unit of risk. The GB Sciences is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  0.42  in GB Sciences on December 28, 2024 and sell it today you would lose (0.39) from holding GB Sciences or give up 92.86% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	96.77%
Values	Daily Returns

Regeneron Pharmaceuticals  vs.  GB Sciences

Regeneron Pharmaceuticals

Risk-Adjusted Performance

Very Weak

Over the last 90 days Regeneron Pharmaceuticals has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's technical and fundamental indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

GB Sciences

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in GB Sciences are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of fairly fragile essential indicators, GB Sciences showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Regeneron Pharmaceuticals and GB Sciences

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

The idea behind Regeneron Pharmaceuticals and GB Sciences 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.