Correlation Between Replimune and Cerevel Therapeutics

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

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

Diversification Opportunities for Replimune and Cerevel Therapeutics

-0.44

Correlation Coefficient

Replimune  Cerevel Therapeutics

Very good diversification

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

Pair Corralation between Replimune and Cerevel Therapeutics

If you would invest  1,028  in Replimune Group on September 2, 2024 and sell it today you would earn a total of  380.00  from holding Replimune Group or generate 36.96% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	0.0%
Values	Daily Returns

Replimune Group  vs.  Cerevel Therapeutics Holdings

Replimune Group

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Replimune Group are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting basic indicators, Replimune disclosed solid returns over the last few months and may actually be approaching a breakup point.

Cerevel Therapeutics

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Cerevel Therapeutics Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, Cerevel Therapeutics is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Replimune and Cerevel Therapeutics

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

The idea behind Replimune Group and Cerevel Therapeutics Holdings 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.