Correlation Between Sellas Life and Navidea Biopharmaceutica

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

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

Diversification Opportunities for Sellas Life and Navidea Biopharmaceutica

0.35

Correlation Coefficient

Sellas Life  Navidea Biopharmaceutica

Weak diversification

The 3 months correlation between Sellas and Navidea is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding Sellas Life Sciences and Navidea Biopharmaceuticals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Navidea Biopharmaceutica and Sellas Life 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 Sellas Life Sciences are associated (or correlated) with Navidea Biopharmaceutica. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Navidea Biopharmaceutica has no effect on the direction of Sellas Life i.e., Sellas Life and Navidea Biopharmaceutica go up and down completely randomly.

Pair Corralation between Sellas Life and Navidea Biopharmaceutica

Considering the 90-day investment horizon Sellas Life Sciences is expected to generate 0.72 times more return on investment than Navidea Biopharmaceutica. However, Sellas Life Sciences is 1.4 times less risky than Navidea Biopharmaceutica. It trades about 0.01 of its potential returns per unit of risk. Navidea Biopharmaceuticals is currently generating about -0.04 per unit of risk. If you would invest  227.00  in Sellas Life Sciences on September 13, 2024 and sell it today you would lose (123.00) from holding Sellas Life Sciences or give up 54.19% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	29.35%
Values	Daily Returns

Sellas Life Sciences  vs.  Navidea Biopharmaceuticals

Sellas Life Sciences

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sellas Life Sciences has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's essential indicators remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Navidea Biopharmaceutica

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Sellas Life and Navidea Biopharmaceutica

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

The idea behind Sellas Life Sciences and Navidea Biopharmaceuticals 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.