Correlation Between Celcuity LLC and Werewolf Therapeutics

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

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

Diversification Opportunities for Celcuity LLC and Werewolf Therapeutics

0.59

Correlation Coefficient

Celcuity LLC  Werewolf Therapeutics

Very weak diversification

The 3 months correlation between Celcuity and Werewolf is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding Celcuity LLC and Werewolf Therapeutics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Werewolf Therapeutics and Celcuity LLC 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 Celcuity LLC are associated (or correlated) with Werewolf Therapeutics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Werewolf Therapeutics has no effect on the direction of Celcuity LLC i.e., Celcuity LLC and Werewolf Therapeutics go up and down completely randomly.

Pair Corralation between Celcuity LLC and Werewolf Therapeutics

Given the investment horizon of 90 days Celcuity LLC is expected to under-perform the Werewolf Therapeutics. But the stock apears to be less risky and, when comparing its historical volatility, Celcuity LLC is 2.52 times less risky than Werewolf Therapeutics. The stock trades about -0.09 of its potential returns per unit of risk. The Werewolf Therapeutics is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  205.00  in Werewolf Therapeutics on August 31, 2024 and sell it today you would lose (8.00) from holding Werewolf Therapeutics or give up 3.9% of portfolio value over 90 days.

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

Celcuity LLC  vs.  Werewolf Therapeutics

Celcuity LLC

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Celcuity LLC has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of conflicting performance in the last few months, the Stock's essential indicators remain rather sound which may send shares a bit higher in December 2024. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Werewolf Therapeutics

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Werewolf Therapeutics are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite quite unsteady basic indicators, Werewolf Therapeutics may actually be approaching a critical reversion point that can send shares even higher in December 2024.

Pair Trading with Celcuity LLC and Werewolf Therapeutics

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

The idea behind Celcuity LLC and Werewolf 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.