Correlation Between Teva Pharma and Context Therapeutics

Can any of the company-specific risk be diversified away by investing in both Teva Pharma and Context Therapeutics 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 Teva Pharma and Context Therapeutics into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Teva Pharma Industries and Context Therapeutics, you can compare the effects of market volatilities on Teva Pharma and Context Therapeutics 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 Teva Pharma with a short position of Context Therapeutics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Teva Pharma and Context Therapeutics.

Diversification Opportunities for Teva Pharma and Context Therapeutics

-0.03

Correlation Coefficient

Teva Pharma  Context Therapeutics

Good diversification

The 3 months correlation between Teva and Context is -0.03. Overlapping area represents the amount of risk that can be diversified away by holding Teva Pharma Industries and Context Therapeutics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Context Therapeutics and Teva Pharma 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 Teva Pharma Industries are associated (or correlated) with Context Therapeutics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Context Therapeutics has no effect on the direction of Teva Pharma i.e., Teva Pharma and Context Therapeutics go up and down completely randomly.

Pair Corralation between Teva Pharma and Context Therapeutics

Given the investment horizon of 90 days Teva Pharma is expected to generate 1.36 times less return on investment than Context Therapeutics. But when comparing it to its historical volatility, Teva Pharma Industries is 2.34 times less risky than Context Therapeutics. It trades about 0.06 of its potential returns per unit of risk. Context Therapeutics is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  68.00  in Context Therapeutics on December 5, 2024 and sell it today you would earn a total of  15.90  from holding Context Therapeutics or generate 23.38% return on investment over 90 days.

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

Teva Pharma Industries  vs.  Context Therapeutics

Teva Pharma Industries

Risk-Adjusted Performance

Very Weak

Over the last 90 days Teva Pharma Industries has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest unfluctuating performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Context Therapeutics

Risk-Adjusted Performance

Very Weak

Over the last 90 days Context Therapeutics has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Teva Pharma and Context Therapeutics

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

The idea behind Teva Pharma Industries and Context Therapeutics 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.