Correlation Between Equillium and Celularity

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

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

Diversification Opportunities for Equillium and Celularity

0.8

Correlation Coefficient

Equillium  Celularity

Very poor diversification

The 3 months correlation between Equillium and Celularity is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Equillium and Celularity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Celularity and Equillium 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 Equillium are associated (or correlated) with Celularity. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Celularity has no effect on the direction of Equillium i.e., Equillium and Celularity go up and down completely randomly.

Pair Corralation between Equillium and Celularity

Allowing for the 90-day total investment horizon Equillium is expected to generate 0.7 times more return on investment than Celularity. However, Equillium is 1.43 times less risky than Celularity. It trades about -0.14 of its potential returns per unit of risk. Celularity is currently generating about -0.14 per unit of risk. If you would invest  211.00  in Equillium on March 2, 2024 and sell it today you would lose (64.00) from holding Equillium or give up 30.33% of portfolio value over 90 days.

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

Equillium  vs.  Celularity

Equillium

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Equillium has generated negative risk-adjusted returns adding no value to investors with long positions. Even with uncertain performance in the last few months, the Stock's basic indicators remain relatively invariable which may send shares a bit higher in July 2024. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Celularity

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Celularity has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's essential indicators remain comparatively stable which may send shares a bit higher in July 2024. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Equillium and Celularity

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

The idea behind Equillium and Celularity 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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.