Correlation Between United Therapeutics and Apellis Pharmaceuticals

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

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

Diversification Opportunities for United Therapeutics and Apellis Pharmaceuticals

0.75

Correlation Coefficient

United Therapeutics  Apellis Pharmaceuticals

Poor diversification

The 3 months correlation between United and Apellis is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding United Therapeutics and Apellis Pharmaceuticals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Apellis Pharmaceuticals and United Therapeutics 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 United Therapeutics are associated (or correlated) with Apellis Pharmaceuticals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Apellis Pharmaceuticals has no effect on the direction of United Therapeutics i.e., United Therapeutics and Apellis Pharmaceuticals go up and down completely randomly.

Pair Corralation between United Therapeutics and Apellis Pharmaceuticals

Given the investment horizon of 90 days United Therapeutics is expected to generate 0.71 times more return on investment than Apellis Pharmaceuticals. However, United Therapeutics is 1.4 times less risky than Apellis Pharmaceuticals. It trades about -0.09 of its potential returns per unit of risk. Apellis Pharmaceuticals is currently generating about -0.12 per unit of risk. If you would invest  35,764  in United Therapeutics on December 29, 2024 and sell it today you would lose (4,962) from holding United Therapeutics or give up 13.87% of portfolio value over 90 days.

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

United Therapeutics  vs.  Apellis Pharmaceuticals

United Therapeutics

Risk-Adjusted Performance

Very Weak

Over the last 90 days United Therapeutics has generated negative risk-adjusted returns adding no value to investors with long positions. Even with weak performance in the last few months, the Stock's technical indicators remain relatively invariable which may send shares a bit higher in April 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Apellis Pharmaceuticals

Risk-Adjusted Performance

Very Weak

Over the last 90 days Apellis Pharmaceuticals 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 essential indicators remain comparatively stable which may send shares a bit higher in April 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with United Therapeutics and Apellis Pharmaceuticals

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

The idea behind United Therapeutics and Apellis Pharmaceuticals 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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.