Correlation Between Sellas Life and Royalty Management

Can any of the company-specific risk be diversified away by investing in both Sellas Life and Royalty Management 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 Royalty Management 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 Royalty Management Holding, you can compare the effects of market volatilities on Sellas Life and Royalty Management 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 Royalty Management. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sellas Life and Royalty Management.

Diversification Opportunities for Sellas Life and Royalty Management

0.18

Correlation Coefficient

Sellas Life  Royalty Management

Average diversification

The 3 months correlation between Sellas and Royalty is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding Sellas Life Sciences and Royalty Management Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Royalty Management 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 Royalty Management. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Royalty Management has no effect on the direction of Sellas Life i.e., Sellas Life and Royalty Management go up and down completely randomly.

Pair Corralation between Sellas Life and Royalty Management

Considering the 90-day investment horizon Sellas Life Sciences is expected to generate 1.79 times more return on investment than Royalty Management. However, Sellas Life is 1.79 times more volatile than Royalty Management Holding. It trades about 0.29 of its potential returns per unit of risk. Royalty Management Holding is currently generating about -0.41 per unit of risk. If you would invest  91.00  in Sellas Life Sciences on October 23, 2024 and sell it today you would earn a total of  22.50  from holding Sellas Life Sciences or generate 24.73% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	36.84%
Values	Daily Returns

Sellas Life Sciences  vs.  Royalty Management Holding

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 comparatively stable essential indicators, Sellas Life is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Royalty Management

Risk-Adjusted Performance

0 of 100

Good

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

Pair Trading with Sellas Life and Royalty Management

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

The idea behind Sellas Life Sciences and Royalty Management 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.