Correlation Between Apellis Pharmaceuticals and Legend Biotech

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

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

Diversification Opportunities for Apellis Pharmaceuticals and Legend Biotech

0.77

Correlation Coefficient

Apellis Pharmaceuticals  Legend Biotech

Poor diversification

The 3 months correlation between Apellis and Legend is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Apellis Pharmaceuticals and Legend Biotech Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Legend Biotech Corp and Apellis Pharmaceuticals 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 Apellis Pharmaceuticals are associated (or correlated) with Legend Biotech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Legend Biotech Corp has no effect on the direction of Apellis Pharmaceuticals i.e., Apellis Pharmaceuticals and Legend Biotech go up and down completely randomly.

Pair Corralation between Apellis Pharmaceuticals and Legend Biotech

Given the investment horizon of 90 days Apellis Pharmaceuticals is expected to under-perform the Legend Biotech. But the stock apears to be less risky and, when comparing its historical volatility, Apellis Pharmaceuticals is 1.86 times less risky than Legend Biotech. The stock trades about -0.24 of its potential returns per unit of risk. The Legend Biotech Corp is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest  4,526  in Legend Biotech Corp on July 26, 2024 and sell it today you would lose (131.00) from holding Legend Biotech Corp or give up 2.89% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	95.65%
Values	Daily Returns

Apellis Pharmaceuticals  vs.  Legend Biotech Corp

Apellis Pharmaceuticals

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Apellis Pharmaceuticals 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 November 2024. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Legend Biotech Corp

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Apellis Pharmaceuticals and Legend Biotech

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

The idea behind Apellis Pharmaceuticals and Legend Biotech Corp 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 Global Correlations module to find global opportunities by holding instruments from different markets.