Correlation Between Vericel Corp and Dianthus Therapeutics

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

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

Diversification Opportunities for Vericel Corp and Dianthus Therapeutics

0.18

Correlation Coefficient

Vericel Corp  Dianthus Therapeutics

Average diversification

The 3 months correlation between Vericel and Dianthus is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding Vericel Corp Ord and Dianthus Therapeutics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dianthus Therapeutics and Vericel Corp 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 Vericel Corp Ord are associated (or correlated) with Dianthus Therapeutics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dianthus Therapeutics has no effect on the direction of Vericel Corp i.e., Vericel Corp and Dianthus Therapeutics go up and down completely randomly.

Pair Corralation between Vericel Corp and Dianthus Therapeutics

Given the investment horizon of 90 days Vericel Corp Ord is expected to generate 0.5 times more return on investment than Dianthus Therapeutics. However, Vericel Corp Ord is 1.99 times less risky than Dianthus Therapeutics. It trades about -0.11 of its potential returns per unit of risk. Dianthus Therapeutics is currently generating about -0.07 per unit of risk. If you would invest  5,824  in Vericel Corp Ord on December 3, 2024 and sell it today you would lose (873.00) from holding Vericel Corp Ord or give up 14.99% of portfolio value over 90 days.

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

Vericel Corp Ord  vs.  Dianthus Therapeutics

Vericel Corp Ord

Risk-Adjusted Performance

Very Weak

Over the last 90 days Vericel Corp Ord 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 technical and fundamental indicators remain quite persistent which may send shares a bit higher in April 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Dianthus Therapeutics

Risk-Adjusted Performance

Very Weak

Over the last 90 days Dianthus Therapeutics has generated negative risk-adjusted returns adding no value to investors with long positions. Despite conflicting 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 recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Pair Trading with Vericel Corp and Dianthus Therapeutics

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

The idea behind Vericel Corp Ord and Dianthus 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 Transaction History module to view history of all your transactions and understand their impact on performance.