Correlation Between Orgenesis and WuXi Biologics

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

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

Diversification Opportunities for Orgenesis and WuXi Biologics

-0.36

Correlation Coefficient

Orgenesis  WuXi Biologics

Very good diversification

The 3 months correlation between Orgenesis and WuXi is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding Orgenesis and WuXi Biologics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WuXi Biologics and Orgenesis 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 Orgenesis are associated (or correlated) with WuXi Biologics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WuXi Biologics has no effect on the direction of Orgenesis i.e., Orgenesis and WuXi Biologics go up and down completely randomly.

Pair Corralation between Orgenesis and WuXi Biologics

Given the investment horizon of 90 days Orgenesis is expected to under-perform the WuXi Biologics. In addition to that, Orgenesis is 3.35 times more volatile than WuXi Biologics. It trades about -0.13 of its total potential returns per unit of risk. WuXi Biologics is currently generating about -0.05 per unit of volatility. If you would invest  180.00  in WuXi Biologics on January 25, 2024 and sell it today you would lose (10.00) from holding WuXi Biologics or give up 5.56% of portfolio value over 90 days.

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

Orgenesis  vs.  WuXi Biologics

Orgenesis

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Orgenesis are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak technical and fundamental indicators, Orgenesis unveiled solid returns over the last few months and may actually be approaching a breakup point.

WuXi Biologics

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days WuXi Biologics has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's fundamental drivers remain nearly stable which may send shares a bit higher in May 2024. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Orgenesis and WuXi Biologics

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

The idea behind Orgenesis and WuXi Biologics 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.