Correlation Between Roivant Sciences and Celularity

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

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

Diversification Opportunities for Roivant Sciences and Celularity

0.42

Correlation Coefficient

Roivant Sciences  Celularity

Very weak diversification

The 3 months correlation between Roivant and Celularity is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding Roivant Sciences and Celularity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Celularity and Roivant Sciences 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 Roivant Sciences are associated (or correlated) with Celularity. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Celularity has no effect on the direction of Roivant Sciences i.e., Roivant Sciences and Celularity go up and down completely randomly.

Pair Corralation between Roivant Sciences and Celularity

If you would invest  1.25  in Celularity on September 2, 2024 and sell it today you would earn a total of  0.75  from holding Celularity or generate 60.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	2.22%
Values	Daily Returns

Roivant Sciences  vs.  Celularity

Roivant Sciences

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Roivant Sciences has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Roivant Sciences is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Celularity

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Celularity are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of fairly uncertain basic indicators, Celularity showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Roivant Sciences and Celularity

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

The idea behind Roivant Sciences and Celularity 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.