Correlation Between Rockwell Medical and Connect Biopharma
Can any of the company-specific risk be diversified away by investing in both Rockwell Medical and Connect Biopharma 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 Rockwell Medical and Connect Biopharma into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Rockwell Medical and Connect Biopharma Holdings, you can compare the effects of market volatilities on Rockwell Medical and Connect Biopharma 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 Rockwell Medical with a short position of Connect Biopharma. Check out your portfolio center. Please also check ongoing floating volatility patterns of Rockwell Medical and Connect Biopharma.
Diversification Opportunities for Rockwell Medical and Connect Biopharma
0.47 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Rockwell and Connect is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding Rockwell Medical and Connect Biopharma Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Connect Biopharma and Rockwell Medical 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 Rockwell Medical are associated (or correlated) with Connect Biopharma. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Connect Biopharma has no effect on the direction of Rockwell Medical i.e., Rockwell Medical and Connect Biopharma go up and down completely randomly.
Pair Corralation between Rockwell Medical and Connect Biopharma
Given the investment horizon of 90 days Rockwell Medical is expected to generate 0.94 times more return on investment than Connect Biopharma. However, Rockwell Medical is 1.06 times less risky than Connect Biopharma. It trades about 0.07 of its potential returns per unit of risk. Connect Biopharma Holdings is currently generating about -0.03 per unit of risk. If you would invest 179.00 in Rockwell Medical on September 3, 2024 and sell it today you would earn a total of 50.00 from holding Rockwell Medical or generate 27.93% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Rockwell Medical vs. Connect Biopharma Holdings
Performance |
| Timeline |
| Rockwell Medical |
| Connect Biopharma |
Rockwell Medical and Connect Biopharma Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Rockwell Medical and Connect Biopharma
The main advantage of trading using opposite Rockwell Medical and Connect Biopharma positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Rockwell Medical position performs unexpectedly, Connect Biopharma 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 Connect Biopharma will offset losses from the drop in Connect Biopharma's long position.| Rockwell Medical vs. Connect Biopharma Holdings | Rockwell Medical vs. Acumen Pharmaceuticals | Rockwell Medical vs. Nuvation Bio | Rockwell Medical vs. Eledon Pharmaceuticals |
| Connect Biopharma vs. DiaMedica Therapeutics | Connect Biopharma vs. Lyra Therapeutics | Connect Biopharma vs. Centessa Pharmaceuticals PLC |
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 Transaction History module to view history of all your transactions and understand their impact on performance.
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