Correlation Between Recursion Pharmaceuticals and NOVARTIS

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

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

Diversification Opportunities for Recursion Pharmaceuticals and NOVARTIS

-0.39

Correlation Coefficient

Recursion Pharmaceuticals  NOVARTIS

Very good diversification

The 3 months correlation between Recursion and NOVARTIS is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding Recursion Pharmaceuticals and NOVARTIS CAPITAL P in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NOVARTIS CAPITAL P and Recursion Pharmaceuticals 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 Recursion Pharmaceuticals are associated (or correlated) with NOVARTIS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NOVARTIS CAPITAL P has no effect on the direction of Recursion Pharmaceuticals i.e., Recursion Pharmaceuticals and NOVARTIS go up and down completely randomly.

Pair Corralation between Recursion Pharmaceuticals and NOVARTIS

Given the investment horizon of 90 days Recursion Pharmaceuticals is expected to generate 14.62 times more return on investment than NOVARTIS. However, Recursion Pharmaceuticals is 14.62 times more volatile than NOVARTIS CAPITAL P. It trades about 0.06 of its potential returns per unit of risk. NOVARTIS CAPITAL P is currently generating about -0.18 per unit of risk. If you would invest  657.00  in Recursion Pharmaceuticals on September 13, 2024 and sell it today you would earn a total of  89.00  from holding Recursion Pharmaceuticals or generate 13.55% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.41%
Values	Daily Returns

Recursion Pharmaceuticals  vs.  NOVARTIS CAPITAL P

Recursion Pharmaceuticals

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Recursion Pharmaceuticals are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of fairly inconsistent basic indicators, Recursion Pharmaceuticals showed solid returns over the last few months and may actually be approaching a breakup point.

NOVARTIS CAPITAL P

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days NOVARTIS CAPITAL P has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, NOVARTIS is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Recursion Pharmaceuticals and NOVARTIS

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

The idea behind Recursion Pharmaceuticals and NOVARTIS CAPITAL P 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.