Correlation Between Algernon Pharmaceuticals and Field Trip

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

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

Diversification Opportunities for Algernon Pharmaceuticals and Field Trip

0.03

Correlation Coefficient

Algernon Pharmaceuticals  Field Trip

Significant diversification

The 3 months correlation between Algernon and Field is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding Algernon Pharmaceuticals and Field Trip Health in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Field Trip Health and Algernon 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 Algernon Pharmaceuticals are associated (or correlated) with Field Trip. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Field Trip Health has no effect on the direction of Algernon Pharmaceuticals i.e., Algernon Pharmaceuticals and Field Trip go up and down completely randomly.

Pair Corralation between Algernon Pharmaceuticals and Field Trip

Assuming the 90 days horizon Algernon Pharmaceuticals is expected to generate 2.17 times less return on investment than Field Trip. In addition to that, Algernon Pharmaceuticals is 1.17 times more volatile than Field Trip Health. It trades about 0.0 of its total potential returns per unit of risk. Field Trip Health is currently generating about 0.01 per unit of volatility. If you would invest  5.50  in Field Trip Health on September 23, 2024 and sell it today you would lose (1.38) from holding Field Trip Health or give up 25.09% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	22.65%
Values	Daily Returns

Algernon Pharmaceuticals  vs.  Field Trip Health

Algernon Pharmaceuticals

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Algernon Pharmaceuticals are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Algernon Pharmaceuticals may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Field Trip Health

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Field Trip Health has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Field Trip is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Algernon Pharmaceuticals and Field Trip

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

The idea behind Algernon Pharmaceuticals and Field Trip Health 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 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.