Correlation Between Apellis Pharmaceuticals and Fate Therapeutics

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

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

Diversification Opportunities for Apellis Pharmaceuticals and Fate Therapeutics

-0.4

Correlation Coefficient

Apellis Pharmaceuticals  Fate Therapeutics

Very good diversification

The 3 months correlation between Apellis and Fate is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding Apellis Pharmaceuticals and Fate Therapeutics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fate Therapeutics and Apellis 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 Apellis Pharmaceuticals are associated (or correlated) with Fate Therapeutics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fate Therapeutics has no effect on the direction of Apellis Pharmaceuticals i.e., Apellis Pharmaceuticals and Fate Therapeutics go up and down completely randomly.

Pair Corralation between Apellis Pharmaceuticals and Fate Therapeutics

Given the investment horizon of 90 days Apellis Pharmaceuticals is expected to generate 0.32 times more return on investment than Fate Therapeutics. However, Apellis Pharmaceuticals is 3.08 times less risky than Fate Therapeutics. It trades about -0.07 of its potential returns per unit of risk. Fate Therapeutics is currently generating about -0.45 per unit of risk. If you would invest  3,414  in Apellis Pharmaceuticals on September 28, 2024 and sell it today you would lose (123.00) from holding Apellis Pharmaceuticals or give up 3.6% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Apellis Pharmaceuticals  vs.  Fate Therapeutics

Apellis Pharmaceuticals

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Apellis Pharmaceuticals are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady essential indicators, Apellis Pharmaceuticals unveiled solid returns over the last few months and may actually be approaching a breakup point.

Fate Therapeutics

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Fate Therapeutics has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain rather sound which may send shares a bit higher in January 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with Apellis Pharmaceuticals and Fate Therapeutics

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

The idea behind Apellis Pharmaceuticals and Fate 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.