Correlation Between Sellas Life and FACT II

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

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

Diversification Opportunities for Sellas Life and FACT II

0.12

Correlation Coefficient

Sellas Life  FACT II

Average diversification

The 3 months correlation between Sellas and FACT is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding Sellas Life Sciences and FACT II Acquisition in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FACT II Acquisition and Sellas Life 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 Sellas Life Sciences are associated (or correlated) with FACT II. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FACT II Acquisition has no effect on the direction of Sellas Life i.e., Sellas Life and FACT II go up and down completely randomly.

Pair Corralation between Sellas Life and FACT II

Considering the 90-day investment horizon Sellas Life Sciences is expected to under-perform the FACT II. But the stock apears to be less risky and, when comparing its historical volatility, Sellas Life Sciences is 60.66 times less risky than FACT II. The stock trades about -0.06 of its potential returns per unit of risk. The FACT II Acquisition is currently generating about 0.28 of returns per unit of risk over similar time horizon. If you would invest  0.00  in FACT II Acquisition on October 25, 2024 and sell it today you would earn a total of  18.00  from holding FACT II Acquisition or generate 9.223372036854776E16% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	21.67%
Values	Daily Returns

Sellas Life Sciences  vs.  FACT II Acquisition

Sellas Life Sciences

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sellas Life Sciences has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's essential indicators remain comparatively stable which may send shares a bit higher in February 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

FACT II Acquisition

Risk-Adjusted Performance

0 of 100

Solid

Over the last 90 days FACT II Acquisition has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly inconsistent basic indicators, FACT II showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Sellas Life and FACT II

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

The idea behind Sellas Life Sciences and FACT II Acquisition 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.