Correlation Between US Stem and Social Life
Can any of the company-specific risk be diversified away by investing in both US Stem and Social Life 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 US Stem and Social Life into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between US Stem Cell and Social Life Network, you can compare the effects of market volatilities on US Stem and Social Life 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 US Stem with a short position of Social Life. Check out your portfolio center. Please also check ongoing floating volatility patterns of US Stem and Social Life.
Diversification Opportunities for US Stem and Social Life
0.21 | Correlation Coefficient |
Modest diversification
The 3 months correlation between USRM and Social is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding US Stem Cell and Social Life Network in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Social Life Network and US Stem 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 US Stem Cell are associated (or correlated) with Social Life. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Social Life Network has no effect on the direction of US Stem i.e., US Stem and Social Life go up and down completely randomly.
Pair Corralation between US Stem and Social Life
Given the investment horizon of 90 days US Stem Cell is expected to under-perform the Social Life. In addition to that, US Stem is 1.1 times more volatile than Social Life Network. It trades about -0.02 of its total potential returns per unit of risk. Social Life Network is currently generating about 0.05 per unit of volatility. If you would invest 0.18 in Social Life Network on September 14, 2024 and sell it today you would lose (0.14) from holding Social Life Network or give up 77.78% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 29.15% |
| Values | Daily Returns |
US Stem Cell vs. Social Life Network
Performance |
| Timeline |
| US Stem Cell |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Social Life Network |
US Stem and Social Life Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with US Stem and Social Life
The main advantage of trading using opposite US Stem and Social Life positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if US Stem position performs unexpectedly, Social Life 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 Social Life will offset losses from the drop in Social Life's long position.| US Stem vs. XOMA Corp | US Stem vs. Lineage Cell Therapeutics | US Stem vs. Nascent Biotech | US Stem vs. Protokinetix |
| Social Life vs. Infobird Co | Social Life vs. Astra Veda | Social Life vs. Fernhill Corp | Social Life vs. Protek Capital |
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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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