Correlation Between EQRx and Celularity
Can any of the company-specific risk be diversified away by investing in both EQRx 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 EQRx and Celularity into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between EQRx Inc and Celularity, you can compare the effects of market volatilities on EQRx 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 EQRx with a short position of Celularity. Check out your portfolio center. Please also check ongoing floating volatility patterns of EQRx and Celularity.
Diversification Opportunities for EQRx and Celularity
0.52 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between EQRx and Celularity is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding EQRx Inc and Celularity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Celularity and EQRx 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 EQRx Inc 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 EQRx i.e., EQRx and Celularity go up and down completely randomly.
Pair Corralation between EQRx and Celularity
Assuming the 90 days horizon EQRx is expected to generate 16.24 times less return on investment than Celularity. But when comparing it to its historical volatility, EQRx Inc is 7.27 times less risky than Celularity. It trades about 0.05 of its potential returns per unit of risk. Celularity is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 7.28 in Celularity on November 2, 2024 and sell it today you would lose (0.68) from holding Celularity or give up 9.34% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 26.67% |
| Values | Daily Returns |
EQRx Inc vs. Celularity
Performance |
| Timeline |
| EQRx Inc |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Celularity |
EQRx and Celularity Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with EQRx and Celularity
The main advantage of trading using opposite EQRx and Celularity positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if EQRx 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 EQRx Inc 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.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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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