Correlation Between Sellas Life and Traws Pharma

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

Diversification Opportunities for Sellas Life and Traws Pharma

-0.39

Correlation Coefficient

Sellas Life  Traws Pharma

Very good diversification

The 3 months correlation between Sellas and Traws is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding Sellas Life Sciences and Traws Pharma in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Traws Pharma 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 Traws Pharma. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Traws Pharma has no effect on the direction of Sellas Life i.e., Sellas Life and Traws Pharma go up and down completely randomly.

Pair Corralation between Sellas Life and Traws Pharma

Considering the 90-day investment horizon Sellas Life Sciences is expected to generate 0.59 times more return on investment than Traws Pharma. However, Sellas Life Sciences is 1.7 times less risky than Traws Pharma. It trades about 0.01 of its potential returns per unit of risk. Traws Pharma is currently generating about 0.01 per unit of risk. If you would invest  151.00  in Sellas Life Sciences on October 4, 2024 and sell it today you would lose (44.00) from holding Sellas Life Sciences or give up 29.14% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Sellas Life Sciences  vs.  Traws Pharma

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 latest weak performance, the Stock's essential indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Traws Pharma

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Traws Pharma are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of fairly fragile basic indicators, Traws Pharma showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Sellas Life and Traws Pharma

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

The idea behind Sellas Life Sciences and Traws Pharma 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .