Correlation Between Armada Hflr and Relief Therapeutics

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

By analyzing existing cross correlation between Armada Hflr Pr and Relief Therapeutics Holding, you can compare the effects of market volatilities on Armada Hflr and Relief Therapeutics 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 Armada Hflr with a short position of Relief Therapeutics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Armada Hflr and Relief Therapeutics.

Diversification Opportunities for Armada Hflr and Relief Therapeutics

-0.35

Correlation Coefficient

Armada Hflr  Relief Therapeutics

Very good diversification

The 3 months correlation between Armada and Relief is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding Armada Hflr Pr and Relief Therapeutics Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Relief Therapeutics and Armada Hflr 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 Armada Hflr Pr are associated (or correlated) with Relief Therapeutics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Relief Therapeutics has no effect on the direction of Armada Hflr i.e., Armada Hflr and Relief Therapeutics go up and down completely randomly.

Pair Corralation between Armada Hflr and Relief Therapeutics

Considering the 90-day investment horizon Armada Hflr Pr is expected to generate 0.21 times more return on investment than Relief Therapeutics. However, Armada Hflr Pr is 4.68 times less risky than Relief Therapeutics. It trades about -0.25 of its potential returns per unit of risk. Relief Therapeutics Holding is currently generating about -0.07 per unit of risk. If you would invest  1,104  in Armada Hflr Pr on September 20, 2024 and sell it today you would lose (75.00) from holding Armada Hflr Pr or give up 6.79% of portfolio value over 90 days.

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

Armada Hflr Pr  vs.  Relief Therapeutics Holding

Armada Hflr Pr

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Armada Hflr Pr has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's technical indicators remain strong and the recent confusion on Wall Street may also be a sign of long-lasting gains for the firm traders.

Relief Therapeutics

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Relief Therapeutics Holding are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unsteady basic indicators, Relief Therapeutics showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Armada Hflr and Relief Therapeutics

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

The idea behind Armada Hflr Pr and Relief Therapeutics Holding 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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.