Correlation Between Celularity and Humacyte

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

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

Diversification Opportunities for Celularity and Humacyte

-0.26

Correlation Coefficient

Celularity  Humacyte

Very good diversification

The 3 months correlation between Celularity and Humacyte is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding Celularity and Humacyte in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Humacyte and Celularity 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 Celularity are associated (or correlated) with Humacyte. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Humacyte has no effect on the direction of Celularity i.e., Celularity and Humacyte go up and down completely randomly.

Pair Corralation between Celularity and Humacyte

Given the investment horizon of 90 days Celularity is expected to generate 2.3 times more return on investment than Humacyte. However, Celularity is 2.3 times more volatile than Humacyte. It trades about 0.03 of its potential returns per unit of risk. Humacyte is currently generating about 0.05 per unit of risk. If you would invest  286.00  in Celularity on September 3, 2024 and sell it today you would lose (82.00) from holding Celularity or give up 28.67% of portfolio value over 90 days.

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

Celularity  vs.  Humacyte

Celularity

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Celularity are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak essential indicators, Celularity unveiled solid returns over the last few months and may actually be approaching a breakup point.

Humacyte

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Humacyte are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Humacyte showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Celularity and Humacyte

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

The idea behind Celularity and Humacyte 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.