Correlation Between Teva Pharma and Unicycive Therapeutics

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

Diversification Opportunities for Teva Pharma and Unicycive Therapeutics

0.66

Correlation Coefficient

Teva Pharma  Unicycive Therapeutics

Poor diversification

The 3 months correlation between Teva and Unicycive is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Teva Pharma Industries and Unicycive Therapeutics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Unicycive 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 Unicycive Therapeutics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Unicycive Therapeutics has no effect on the direction of Teva Pharma i.e., Teva Pharma and Unicycive Therapeutics go up and down completely randomly.

Pair Corralation between Teva Pharma and Unicycive Therapeutics

Given the investment horizon of 90 days Teva Pharma Industries is expected to under-perform the Unicycive Therapeutics. But the stock apears to be less risky and, when comparing its historical volatility, Teva Pharma Industries is 1.6 times less risky than Unicycive Therapeutics. The stock trades about -0.2 of its potential returns per unit of risk. The Unicycive Therapeutics is currently generating about -0.07 of returns per unit of risk over similar time horizon. If you would invest  81.00  in Unicycive Therapeutics on December 29, 2024 and sell it today you would lose (18.00) from holding Unicycive Therapeutics or give up 22.22% of portfolio value over 90 days.

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

Teva Pharma Industries  vs.  Unicycive 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 unfluctuating performance in the last few months, the Stock's basic indicators remain somewhat 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.

Unicycive Therapeutics

Risk-Adjusted Performance

Very Weak

Over the last 90 days Unicycive Therapeutics 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 fundamental 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 Unicycive Therapeutics

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

The idea behind Teva Pharma Industries and Unicycive 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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.