Correlation Between Carl Zeiss and Repligen

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

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

Diversification Opportunities for Carl Zeiss and Repligen

-0.44

Correlation Coefficient

Carl Zeiss  Repligen

Very good diversification

The 3 months correlation between Carl and Repligen is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding Carl Zeiss Meditec and Repligen in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Repligen and Carl Zeiss 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 Carl Zeiss Meditec are associated (or correlated) with Repligen. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Repligen has no effect on the direction of Carl Zeiss i.e., Carl Zeiss and Repligen go up and down completely randomly.

Pair Corralation between Carl Zeiss and Repligen

Assuming the 90 days horizon Carl Zeiss Meditec is expected to under-perform the Repligen. In addition to that, Carl Zeiss is 1.34 times more volatile than Repligen. It trades about -0.08 of its total potential returns per unit of risk. Repligen is currently generating about 0.01 per unit of volatility. If you would invest  14,593  in Repligen on September 27, 2024 and sell it today you would lose (139.50) from holding Repligen or give up 0.96% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	98.44%
Values	Daily Returns

Carl Zeiss Meditec  vs.  Repligen

Carl Zeiss Meditec

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Carl Zeiss Meditec has generated negative risk-adjusted returns adding no value to investors with long positions. Despite inconsistent performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Repligen

Risk-Adjusted Performance

0 of 100

Weak

Over the last 90 days Repligen has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy technical and fundamental indicators, Repligen is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Carl Zeiss and Repligen

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

The idea behind Carl Zeiss Meditec and Repligen 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.