Correlation Between Roivant Sciences and Scilex Holding

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

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

Diversification Opportunities for Roivant Sciences and Scilex Holding

0.0

Correlation Coefficient

Roivant Sciences  Scilex Holding

Pay attention - limited upside

The 3 months correlation between Roivant and Scilex is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Roivant Sciences and Scilex Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Scilex Holding 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 Scilex Holding. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Scilex Holding has no effect on the direction of Roivant Sciences i.e., Roivant Sciences and Scilex Holding go up and down completely randomly.

Pair Corralation between Roivant Sciences and Scilex Holding

If you would invest  20.00  in Scilex Holding on December 29, 2024 and sell it today you would lose (10.00) from holding Scilex Holding or give up 50.0% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Roivant Sciences  vs.  Scilex Holding

Roivant Sciences

Risk-Adjusted Performance

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.

Scilex Holding

Risk-Adjusted Performance

Very Weak

Over the last 90 days Scilex Holding has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly inconsistent basic indicators, Scilex Holding may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Roivant Sciences and Scilex Holding

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

The idea behind Roivant Sciences and Scilex Holding 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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.