Correlation Between Lineage Cell and Innovent Biologics
Can any of the company-specific risk be diversified away by investing in both Lineage Cell and Innovent 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 Lineage Cell and Innovent Biologics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lineage Cell Therapeutics and Innovent Biologics, you can compare the effects of market volatilities on Lineage Cell and Innovent 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 Lineage Cell with a short position of Innovent Biologics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lineage Cell and Innovent Biologics.
Diversification Opportunities for Lineage Cell and Innovent Biologics
0.16 | Correlation Coefficient |
Average diversification
The 3 months correlation between Lineage and Innovent is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding Lineage Cell Therapeutics and Innovent Biologics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Innovent Biologics and Lineage Cell 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 Lineage Cell Therapeutics are associated (or correlated) with Innovent Biologics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Innovent Biologics has no effect on the direction of Lineage Cell i.e., Lineage Cell and Innovent Biologics go up and down completely randomly.
Pair Corralation between Lineage Cell and Innovent Biologics
Given the investment horizon of 90 days Lineage Cell Therapeutics is expected to under-perform the Innovent Biologics. In addition to that, Lineage Cell is 1.76 times more volatile than Innovent Biologics. It trades about -0.15 of its total potential returns per unit of risk. Innovent Biologics is currently generating about -0.02 per unit of volatility. If you would invest 508.00 in Innovent Biologics on August 29, 2024 and sell it today you would lose (23.00) from holding Innovent Biologics or give up 4.53% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lineage Cell Therapeutics vs. Innovent Biologics
Performance |
| Timeline |
| Lineage Cell Therapeutics |
| Innovent Biologics |
Lineage Cell and Innovent Biologics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lineage Cell and Innovent Biologics
The main advantage of trading using opposite Lineage Cell and Innovent Biologics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lineage Cell position performs unexpectedly, Innovent 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 Innovent Biologics will offset losses from the drop in Innovent Biologics' long position.| Lineage Cell vs. MAIA Biotechnology | Lineage Cell vs. Armata Pharmaceuticals | Lineage Cell vs. Portage Biotech | Lineage Cell vs. Cadrenal Therapeutics, Common |
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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
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