Correlation Between Rigel Pharmaceuticals and Fortress Biotech

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

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

Diversification Opportunities for Rigel Pharmaceuticals and Fortress Biotech

-0.58

Correlation Coefficient

Rigel Pharmaceuticals  Fortress Biotech

Excellent diversification

The 3 months correlation between Rigel and Fortress is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding Rigel Pharmaceuticals and Fortress Biotech in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fortress Biotech and Rigel 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 Rigel Pharmaceuticals are associated (or correlated) with Fortress Biotech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fortress Biotech has no effect on the direction of Rigel Pharmaceuticals i.e., Rigel Pharmaceuticals and Fortress Biotech go up and down completely randomly.

Pair Corralation between Rigel Pharmaceuticals and Fortress Biotech

Given the investment horizon of 90 days Rigel Pharmaceuticals is expected to generate 1.48 times more return on investment than Fortress Biotech. However, Rigel Pharmaceuticals is 1.48 times more volatile than Fortress Biotech. It trades about 0.05 of its potential returns per unit of risk. Fortress Biotech is currently generating about -0.11 per unit of risk. If you would invest  1,647  in Rigel Pharmaceuticals on December 29, 2024 and sell it today you would earn a total of  141.00  from holding Rigel Pharmaceuticals or generate 8.56% return on investment over 90 days.

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

Rigel Pharmaceuticals  vs.  Fortress Biotech

Rigel Pharmaceuticals

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Rigel Pharmaceuticals are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite quite unfluctuating technical and fundamental indicators, Rigel Pharmaceuticals disclosed solid returns over the last few months and may actually be approaching a breakup point.

Fortress Biotech

Risk-Adjusted Performance

Very Weak

Over the last 90 days Fortress Biotech has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's forward indicators remain very healthy which may send shares a bit higher in April 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with Rigel Pharmaceuticals and Fortress Biotech

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

The idea behind Rigel Pharmaceuticals and Fortress Biotech 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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.