Correlation Between Intracellular and Alkermes Plc

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

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

Diversification Opportunities for Intracellular and Alkermes Plc

-0.09

Correlation Coefficient

Intracellular  Alkermes Plc

Good diversification

The 3 months correlation between Intracellular and Alkermes is -0.09. Overlapping area represents the amount of risk that can be diversified away by holding Intracellular Th and Alkermes Plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alkermes Plc and Intracellular 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 Intracellular Th are associated (or correlated) with Alkermes Plc. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alkermes Plc has no effect on the direction of Intracellular i.e., Intracellular and Alkermes Plc go up and down completely randomly.

Pair Corralation between Intracellular and Alkermes Plc

Given the investment horizon of 90 days Intracellular Th is expected to generate 1.27 times more return on investment than Alkermes Plc. However, Intracellular is 1.27 times more volatile than Alkermes Plc. It trades about 0.07 of its potential returns per unit of risk. Alkermes Plc is currently generating about 0.01 per unit of risk. If you would invest  6,298  in Intracellular Th on February 6, 2025 and sell it today you would earn a total of  6,889  from holding Intracellular Th or generate 109.38% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	95.14%
Values	Daily Returns

Intracellular Th  vs.  Alkermes Plc

Intracellular Th

Risk-Adjusted Performance

Solid

Over the last 90 days Intracellular Th has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong fundamental indicators, Intracellular is not utilizing all of its potentials. The newest stock price confusion, may contribute to short-horizon losses for the traders.

Alkermes Plc

Risk-Adjusted Performance

Very Weak

Over the last 90 days Alkermes Plc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable forward-looking signals, Alkermes Plc is not utilizing all of its potentials. The recent stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Intracellular and Alkermes Plc

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

The idea behind Intracellular Th and Alkermes Plc 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.