Correlation Between Dena and Abcellera Biologics

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Can any of the company-specific risk be diversified away by investing in both Dena and Abcellera Biologics 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 Dena and Abcellera Biologics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dena Ltd Tokyo and Abcellera Biologics, you can compare the effects of market volatilities on Dena and Abcellera Biologics 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 Dena with a short position of Abcellera Biologics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dena and Abcellera Biologics.

Diversification Opportunities for Dena and Abcellera Biologics

-0.23
  Correlation Coefficient

Very good diversification

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

Pair Corralation between Dena and Abcellera Biologics

Assuming the 90 days horizon Dena Ltd Tokyo is expected to generate 0.44 times more return on investment than Abcellera Biologics. However, Dena Ltd Tokyo is 2.28 times less risky than Abcellera Biologics. It trades about -0.03 of its potential returns per unit of risk. Abcellera Biologics is currently generating about -0.04 per unit of risk. If you would invest  1,923  in Dena Ltd Tokyo on August 31, 2022 and sell it today you would lose (624.00)  from holding Dena Ltd Tokyo or give up 32.45% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy99.8%
ValuesDaily Returns

Dena Ltd Tokyo  vs.  Abcellera Biologics

 Performance (%) 
       Timeline  
Dena Ltd Tokyo 
Dena Performance
0 of 100
Over the last 90 days Dena Ltd Tokyo has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest fragile performance, the Stock's fundamental indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Dena Price Channel

Abcellera Biologics 
Abcellera Performance
9 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Abcellera Biologics are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak fundamental indicators, Abcellera Biologics revealed solid returns over the last few months and may actually be approaching a breakup point.

Abcellera Price Channel

Dena and Abcellera Biologics Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Dena and Abcellera Biologics

The main advantage of trading using opposite Dena and Abcellera Biologics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dena position performs unexpectedly, Abcellera Biologics 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 Abcellera Biologics will offset losses from the drop in Abcellera Biologics' long position.
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The idea behind Dena Ltd Tokyo and Abcellera Biologics 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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Check out your portfolio center. 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.

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