Correlation Between Iridium Communications and Serina Therapeutics

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

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

Diversification Opportunities for Iridium Communications and Serina Therapeutics

0.21

Correlation Coefficient

Iridium Communications  Serina Therapeutics

Modest diversification

The 3 months correlation between Iridium and Serina is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding Iridium Communications and Serina Therapeutics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Serina Therapeutics and Iridium Communications 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 Iridium Communications are associated (or correlated) with Serina Therapeutics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Serina Therapeutics has no effect on the direction of Iridium Communications i.e., Iridium Communications and Serina Therapeutics go up and down completely randomly.

Pair Corralation between Iridium Communications and Serina Therapeutics

Given the investment horizon of 90 days Iridium Communications is expected to generate 3.48 times less return on investment than Serina Therapeutics. But when comparing it to its historical volatility, Iridium Communications is 5.09 times less risky than Serina Therapeutics. It trades about 0.2 of its potential returns per unit of risk. Serina Therapeutics is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest  500.00  in Serina Therapeutics on September 20, 2024 and sell it today you would earn a total of  113.00  from holding Serina Therapeutics or generate 22.6% return on investment over 90 days.

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

Iridium Communications  vs.  Serina Therapeutics

Iridium Communications

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Iridium Communications are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy fundamental indicators, Iridium Communications is not utilizing all of its potentials. The newest stock price disarray, may contribute to short-term losses for the investors.

Serina Therapeutics

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Serina Therapeutics has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable technical and fundamental indicators, Serina Therapeutics is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Iridium Communications and Serina Therapeutics

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

The idea behind Iridium Communications and Serina 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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.