Correlation Between Roivant Sciences and Satellogic

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

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

Diversification Opportunities for Roivant Sciences and Satellogic

0.82

Correlation Coefficient

Roivant Sciences  Satellogic

Very poor diversification

The 3 months correlation between Roivant and Satellogic is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Roivant Sciences and Satellogic V in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Satellogic V 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 Satellogic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Satellogic V has no effect on the direction of Roivant Sciences i.e., Roivant Sciences and Satellogic go up and down completely randomly.

Pair Corralation between Roivant Sciences and Satellogic

Assuming the 90 days horizon Roivant Sciences is expected to generate 0.99 times more return on investment than Satellogic. However, Roivant Sciences is 1.01 times less risky than Satellogic. It trades about 0.07 of its potential returns per unit of risk. Satellogic V is currently generating about 0.04 per unit of risk. If you would invest  180.00  in Roivant Sciences on September 18, 2024 and sell it today you would earn a total of  88.00  from holding Roivant Sciences or generate 48.89% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	28.89%
Values	Daily Returns

Roivant Sciences  vs.  Satellogic V

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.

Satellogic V

Risk-Adjusted Performance

20 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Satellogic V are ranked lower than 20 (%) of all global equities and portfolios over the last 90 days. Despite quite weak basic indicators, Satellogic disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Roivant Sciences and Satellogic

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

The idea behind Roivant Sciences and Satellogic V 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.