Correlation Between Vir Biotechnology and Apellis Pharmaceuticals

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

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

Diversification Opportunities for Vir Biotechnology and Apellis Pharmaceuticals

0.02

Correlation Coefficient

Vir Biotechnology  Apellis Pharmaceuticals

Significant diversification

The 3 months correlation between Vir and Apellis is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding Vir Biotechnology and Apellis Pharmaceuticals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Apellis Pharmaceuticals and Vir Biotechnology 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 Vir Biotechnology 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 Vir Biotechnology i.e., Vir Biotechnology and Apellis Pharmaceuticals go up and down completely randomly.

Pair Corralation between Vir Biotechnology and Apellis Pharmaceuticals

Considering the 90-day investment horizon Vir Biotechnology is expected to under-perform the Apellis Pharmaceuticals. But the stock apears to be less risky and, when comparing its historical volatility, Vir Biotechnology is 1.12 times less risky than Apellis Pharmaceuticals. The stock trades about -0.04 of its potential returns per unit of risk. The Apellis Pharmaceuticals is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  4,756  in Apellis Pharmaceuticals on September 26, 2024 and sell it today you would lose (1,424) from holding Apellis Pharmaceuticals or give up 29.94% of portfolio value over 90 days.

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

Vir Biotechnology  vs.  Apellis Pharmaceuticals

Vir Biotechnology

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Vir Biotechnology are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Even with relatively unsteady forward indicators, Vir Biotechnology may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Apellis Pharmaceuticals

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Apellis Pharmaceuticals are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady essential indicators, Apellis Pharmaceuticals unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Vir Biotechnology and Apellis Pharmaceuticals

The main advantage of trading using opposite Vir Biotechnology and Apellis Pharmaceuticals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vir Biotechnology 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 Vir Biotechnology 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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.