Correlation Between Vericel Corp and Halozyme Therapeutics

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

Diversification Opportunities for Vericel Corp and Halozyme Therapeutics

-0.69

Correlation Coefficient

Vericel Corp  Halozyme Therapeutics

Excellent diversification

The 3 months correlation between Vericel and Halozyme is -0.69. Overlapping area represents the amount of risk that can be diversified away by holding Vericel Corp Ord and Halozyme Therapeutics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Halozyme 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 Halozyme Therapeutics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Halozyme Therapeutics has no effect on the direction of Vericel Corp i.e., Vericel Corp and Halozyme Therapeutics go up and down completely randomly.

Pair Corralation between Vericel Corp and Halozyme Therapeutics

Given the investment horizon of 90 days Vericel Corp Ord is expected to under-perform the Halozyme Therapeutics. In addition to that, Vericel Corp is 1.75 times more volatile than Halozyme Therapeutics. It trades about -0.13 of its total potential returns per unit of risk. Halozyme Therapeutics is currently generating about 0.33 per unit of volatility. If you would invest  4,799  in Halozyme Therapeutics on December 29, 2024 and sell it today you would earn a total of  1,585  from holding Halozyme Therapeutics or generate 33.03% return on investment over 90 days.

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

Vericel Corp Ord  vs.  Halozyme 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.

Halozyme Therapeutics

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Halozyme Therapeutics are ranked lower than 25 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating essential indicators, Halozyme Therapeutics displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Vericel Corp and Halozyme Therapeutics

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

The idea behind Vericel Corp Ord and Halozyme 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.

Check out your portfolio center.

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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.