Correlation Between Sellas Life and Keurig

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

Diversification Opportunities for Sellas Life and Keurig

-0.02

Correlation Coefficient

Sellas Life  Keurig

Good diversification

The 3 months correlation between Sellas and Keurig is -0.02. Overlapping area represents the amount of risk that can be diversified away by holding Sellas Life Sciences and Keurig Dr Pepper in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Keurig Dr Pepper 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 Keurig. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Keurig Dr Pepper has no effect on the direction of Sellas Life i.e., Sellas Life and Keurig go up and down completely randomly.

Pair Corralation between Sellas Life and Keurig

Considering the 90-day investment horizon Sellas Life Sciences is expected to generate 58.22 times more return on investment than Keurig. However, Sellas Life is 58.22 times more volatile than Keurig Dr Pepper. It trades about 0.06 of its potential returns per unit of risk. Keurig Dr Pepper is currently generating about 0.02 per unit of risk. If you would invest  99.00  in Sellas Life Sciences on December 30, 2024 and sell it today you would earn a total of  12.00  from holding Sellas Life Sciences or generate 12.12% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.41%
Values	Daily Returns

Sellas Life Sciences  vs.  Keurig Dr Pepper

Sellas Life Sciences

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Sellas Life Sciences are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak essential indicators, Sellas Life unveiled solid returns over the last few months and may actually be approaching a breakup point.

Keurig Dr Pepper

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Keurig Dr Pepper are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Keurig is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Sellas Life and Keurig

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

The idea behind Sellas Life Sciences and Keurig Dr Pepper 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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.