Correlation Between Cenovus Energy and KING PHARMACEUTICALS

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

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

Diversification Opportunities for Cenovus Energy and KING PHARMACEUTICALS

0.19

Correlation Coefficient

Cenovus Energy  KING PHARMACEUTICALS

Average diversification

The 3 months correlation between Cenovus and KING is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding Cenovus Energy and KING PHARMACEUTICALS INC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KING PHARMACEUTICALS INC and Cenovus Energy 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 Cenovus Energy are associated (or correlated) with KING PHARMACEUTICALS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KING PHARMACEUTICALS INC has no effect on the direction of Cenovus Energy i.e., Cenovus Energy and KING PHARMACEUTICALS go up and down completely randomly.

Pair Corralation between Cenovus Energy and KING PHARMACEUTICALS

Considering the 90-day investment horizon Cenovus Energy is expected to generate 1.08 times less return on investment than KING PHARMACEUTICALS. But when comparing it to its historical volatility, Cenovus Energy is 3.81 times less risky than KING PHARMACEUTICALS. It trades about 0.18 of its potential returns per unit of risk. KING PHARMACEUTICALS INC is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  2,480  in KING PHARMACEUTICALS INC on May 6, 2025 and sell it today you would earn a total of  215.00  from holding KING PHARMACEUTICALS INC or generate 8.67% return on investment over 90 days.

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

Cenovus Energy  vs.  KING PHARMACEUTICALS INC

Cenovus Energy

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Cenovus Energy are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of rather unfluctuating basic indicators, Cenovus Energy exhibited solid returns over the last few months and may actually be approaching a breakup point.

KING PHARMACEUTICALS INC

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in KING PHARMACEUTICALS INC are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak technical and fundamental indicators, KING PHARMACEUTICALS reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Cenovus Energy and KING PHARMACEUTICALS

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

The idea behind Cenovus Energy and KING PHARMACEUTICALS INC 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.

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 the Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.