Correlation Between Repligen and Novocure

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

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

Diversification Opportunities for Repligen and Novocure

0.73

Correlation Coefficient

Repligen  Novocure

Poor diversification

The 3 months correlation between Repligen and Novocure is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Repligen and Novocure in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Novocure and Repligen 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 Repligen are associated (or correlated) with Novocure. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Novocure has no effect on the direction of Repligen i.e., Repligen and Novocure go up and down completely randomly.

Pair Corralation between Repligen and Novocure

Given the investment horizon of 90 days Repligen is expected to generate 0.89 times more return on investment than Novocure. However, Repligen is 1.13 times less risky than Novocure. It trades about -0.15 of its potential returns per unit of risk. Novocure is currently generating about -0.3 per unit of risk. If you would invest  18,295  in Repligen on January 30, 2024 and sell it today you would lose (1,637) from holding Repligen or give up 8.95% of portfolio value over 90 days.

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

Repligen  vs.  Novocure

Repligen

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Repligen 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 technical and fundamental indicators remain very healthy which may send shares a bit higher in May 2024. The recent disarray may also be a sign of long period up-swing for the firm investors.

Novocure

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Novocure has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable fundamental indicators, Novocure is not utilizing all of its potentials. The recent stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Repligen and Novocure

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

The idea behind Repligen and Novocure 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.