Correlation Between Algernon Pharmaceuticals and MAIA Biotechnology

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

By analyzing existing cross correlation between Algernon Pharmaceuticals and MAIA Biotechnology, you can compare the effects of market volatilities on Algernon Pharmaceuticals and MAIA Biotechnology 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 MAIA Biotechnology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Algernon Pharmaceuticals and MAIA Biotechnology.

Diversification Opportunities for Algernon Pharmaceuticals and MAIA Biotechnology

0.66

Correlation Coefficient

Algernon Pharmaceuticals  MAIA Biotechnology

Poor diversification

The 3 months correlation between Algernon and MAIA is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Algernon Pharmaceuticals and MAIA Biotechnology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MAIA Biotechnology 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 MAIA Biotechnology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MAIA Biotechnology has no effect on the direction of Algernon Pharmaceuticals i.e., Algernon Pharmaceuticals and MAIA Biotechnology go up and down completely randomly.

Pair Corralation between Algernon Pharmaceuticals and MAIA Biotechnology

Assuming the 90 days horizon Algernon Pharmaceuticals is expected to generate 1.79 times more return on investment than MAIA Biotechnology. However, Algernon Pharmaceuticals is 1.79 times more volatile than MAIA Biotechnology. It trades about 0.05 of its potential returns per unit of risk. MAIA Biotechnology is currently generating about -0.02 per unit of risk. If you would invest  5.17  in Algernon Pharmaceuticals on October 12, 2024 and sell it today you would earn a total of  0.23  from holding Algernon Pharmaceuticals or generate 4.45% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	96.83%
Values	Daily Returns

Algernon Pharmaceuticals  vs.  MAIA Biotechnology

Algernon Pharmaceuticals

Risk-Adjusted Performance

4 of 100

Insignificant

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

MAIA Biotechnology

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days MAIA Biotechnology has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong forward indicators, MAIA Biotechnology is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Algernon Pharmaceuticals and MAIA Biotechnology

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

The idea behind Algernon Pharmaceuticals and MAIA Biotechnology 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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.