Correlation Between Agios Pharm and Alnylam Pharmaceuticals

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

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

Diversification Opportunities for Agios Pharm and Alnylam Pharmaceuticals

-0.42

Correlation Coefficient

Agios Pharm  Alnylam Pharmaceuticals

Very good diversification

The 3 months correlation between Agios and Alnylam is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding Agios Pharm and Alnylam Pharmaceuticals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alnylam Pharmaceuticals and Agios Pharm 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 Agios Pharm are associated (or correlated) with Alnylam Pharmaceuticals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alnylam Pharmaceuticals has no effect on the direction of Agios Pharm i.e., Agios Pharm and Alnylam Pharmaceuticals go up and down completely randomly.

Pair Corralation between Agios Pharm and Alnylam Pharmaceuticals

Given the investment horizon of 90 days Agios Pharm is expected to generate 1.36 times more return on investment than Alnylam Pharmaceuticals. However, Agios Pharm is 1.36 times more volatile than Alnylam Pharmaceuticals. It trades about 0.17 of its potential returns per unit of risk. Alnylam Pharmaceuticals is currently generating about 0.01 per unit of risk. If you would invest  4,473  in Agios Pharm on September 2, 2024 and sell it today you would earn a total of  1,466  from holding Agios Pharm or generate 32.77% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Agios Pharm  vs.  Alnylam Pharmaceuticals

Agios Pharm

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Agios Pharm are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating forward indicators, Agios Pharm displayed solid returns over the last few months and may actually be approaching a breakup point.

Alnylam Pharmaceuticals

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Alnylam Pharmaceuticals has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, Alnylam Pharmaceuticals is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Agios Pharm and Alnylam Pharmaceuticals

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

The idea behind Agios Pharm and Alnylam Pharmaceuticals 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 Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.