Correlation Between Vincerx Pharma and Avantor

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

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

Diversification Opportunities for Vincerx Pharma and Avantor

0.71

Correlation Coefficient

Vincerx Pharma  Avantor

Poor diversification

The 3 months correlation between Vincerx and Avantor is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Vincerx Pharma and Avantor in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Avantor and Vincerx 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 Vincerx Pharma are associated (or correlated) with Avantor. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Avantor has no effect on the direction of Vincerx Pharma i.e., Vincerx Pharma and Avantor go up and down completely randomly.

Pair Corralation between Vincerx Pharma and Avantor

Given the investment horizon of 90 days Vincerx Pharma is expected to under-perform the Avantor. In addition to that, Vincerx Pharma is 3.05 times more volatile than Avantor. It trades about -0.42 of its total potential returns per unit of risk. Avantor is currently generating about -0.14 per unit of volatility. If you would invest  2,108  in Avantor on December 29, 2024 and sell it today you would lose (491.00) from holding Avantor or give up 23.29% of portfolio value over 90 days.

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

Vincerx Pharma  vs.  Avantor

Vincerx Pharma

Risk-Adjusted Performance

Very Weak

Over the last 90 days Vincerx Pharma 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 rather sound which may send shares a bit higher in April 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Avantor

Risk-Adjusted Performance

Very Weak

Over the last 90 days Avantor has generated negative risk-adjusted returns adding no value to investors with long positions. Even with inconsistent performance in the last few months, the Stock's basic 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.

Pair Trading with Vincerx Pharma and Avantor

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

The idea behind Vincerx Pharma and Avantor 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.