Correlation Between Affimed NV and Alector

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

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

Diversification Opportunities for Affimed NV and Alector

0.85

Correlation Coefficient

Affimed NV  Alector

Very poor diversification

The 3 months correlation between Affimed and Alector is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Affimed NV and Alector in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alector and Affimed NV 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 Affimed NV are associated (or correlated) with Alector. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alector has no effect on the direction of Affimed NV i.e., Affimed NV and Alector go up and down completely randomly.

Pair Corralation between Affimed NV and Alector

Given the investment horizon of 90 days Affimed NV is expected to under-perform the Alector. But the stock apears to be less risky and, when comparing its historical volatility, Affimed NV is 1.24 times less risky than Alector. The stock trades about -0.2 of its potential returns per unit of risk. The Alector is currently generating about -0.09 of returns per unit of risk over similar time horizon. If you would invest  172.00  in Alector on December 29, 2024 and sell it today you would lose (43.00) from holding Alector or give up 25.0% of portfolio value over 90 days.

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

Affimed NV  vs.  Alector

Affimed NV

Risk-Adjusted Performance

Very Weak

Over the last 90 days Affimed NV 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 primary indicators remain rather sound which may send shares a bit higher in April 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Alector

Risk-Adjusted Performance

Very Weak

Over the last 90 days Alector has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fragile performance in the last few months, the Stock's technical and fundamental indicators remain rather sound which may send shares a bit higher in April 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with Affimed NV and Alector

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

The idea behind Affimed NV and Alector 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.