Correlation Between Roivant Sciences and Halozyme Therapeutics

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

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

Diversification Opportunities for Roivant Sciences and Halozyme Therapeutics

-0.23

Correlation Coefficient

Roivant Sciences  Halozyme Therapeutics

Very good diversification

The 3 months correlation between Roivant and Halozyme is -0.23. Overlapping area represents the amount of risk that can be diversified away by holding Roivant Sciences and Halozyme Therapeutics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Halozyme Therapeutics and Roivant Sciences 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 Roivant Sciences are associated (or correlated) with Halozyme Therapeutics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Halozyme Therapeutics has no effect on the direction of Roivant Sciences i.e., Roivant Sciences and Halozyme Therapeutics go up and down completely randomly.

Pair Corralation between Roivant Sciences and Halozyme Therapeutics

Given the investment horizon of 90 days Roivant Sciences is expected to generate 1.2 times more return on investment than Halozyme Therapeutics. However, Roivant Sciences is 1.2 times more volatile than Halozyme Therapeutics. It trades about 0.04 of its potential returns per unit of risk. Halozyme Therapeutics is currently generating about 0.0 per unit of risk. If you would invest  799.00  in Roivant Sciences on September 20, 2024 and sell it today you would earn a total of  416.00  from holding Roivant Sciences or generate 52.07% return on investment over 90 days.

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

Roivant Sciences  vs.  Halozyme Therapeutics

Roivant Sciences

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Roivant Sciences are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable forward indicators, Roivant Sciences is not utilizing all of its potentials. The current stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Halozyme Therapeutics

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Halozyme Therapeutics has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's essential indicators remain very healthy which may send shares a bit higher in January 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with Roivant Sciences and Halozyme Therapeutics

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

The idea behind Roivant Sciences and Halozyme 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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.