Correlation Between Ayala Pharmaceuticals and Celldex Therapeutics

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

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

Diversification Opportunities for Ayala Pharmaceuticals and Celldex Therapeutics

0.31

Correlation Coefficient

Ayala Pharmaceuticals  Celldex Therapeutics

Weak diversification

The 3 months correlation between Ayala and Celldex is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding Ayala Pharmaceuticals and Celldex Therapeutics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Celldex Therapeutics and Ayala Pharmaceuticals 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 Ayala Pharmaceuticals are associated (or correlated) with Celldex Therapeutics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Celldex Therapeutics has no effect on the direction of Ayala Pharmaceuticals i.e., Ayala Pharmaceuticals and Celldex Therapeutics go up and down completely randomly.

Pair Corralation between Ayala Pharmaceuticals and Celldex Therapeutics

If you would invest  138.00  in Ayala Pharmaceuticals on September 28, 2024 and sell it today you would earn a total of  0.00  from holding Ayala Pharmaceuticals or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	1.61%
Values	Daily Returns

Ayala Pharmaceuticals  vs.  Celldex Therapeutics

Ayala Pharmaceuticals

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Ayala Pharmaceuticals has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Ayala Pharmaceuticals is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Celldex Therapeutics

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Celldex Therapeutics has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's fundamental indicators remain fairly strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Ayala Pharmaceuticals and Celldex Therapeutics

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

The idea behind Ayala Pharmaceuticals and Celldex Therapeutics 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.

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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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.