Correlation Between Laboratory and Certara

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

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

Diversification Opportunities for Laboratory and Certara

0.1

Correlation Coefficient

Laboratory  Certara

Average diversification

The 3 months correlation between Laboratory and Certara is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding Laboratory of and Certara in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Certara and Laboratory 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 Laboratory of are associated (or correlated) with Certara. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Certara has no effect on the direction of Laboratory i.e., Laboratory and Certara go up and down completely randomly.

Pair Corralation between Laboratory and Certara

Allowing for the 90-day total investment horizon Laboratory of is expected to under-perform the Certara. But the stock apears to be less risky and, when comparing its historical volatility, Laboratory of is 1.75 times less risky than Certara. The stock trades about -0.17 of its potential returns per unit of risk. The Certara is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  1,695  in Certara on February 2, 2024 and sell it today you would earn a total of  43.00  from holding Certara or generate 2.54% return on investment over 90 days.

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

Laboratory of  vs.  Certara

Laboratory

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Laboratory of has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest unfluctuating performance, the Stock's technical indicators remain strong and the recent confusion on Wall Street may also be a sign of long-lasting gains for the firm traders.

Certara

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Certara are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, Certara may actually be approaching a critical reversion point that can send shares even higher in June 2024.

Pair Trading with Laboratory and Certara

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

The idea behind Laboratory of and Certara 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.