Correlation Between Alector and Adhera Therapeutics

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

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

Diversification Opportunities for Alector and Adhera Therapeutics

0.14

Correlation Coefficient

Alector  Adhera Therapeutics

Average diversification

The 3 months correlation between Alector and Adhera is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding Alector and Adhera Therapeutics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Adhera Therapeutics and Alector 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 Alector are associated (or correlated) with Adhera Therapeutics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Adhera Therapeutics has no effect on the direction of Alector i.e., Alector and Adhera Therapeutics go up and down completely randomly.

Pair Corralation between Alector and Adhera Therapeutics

If you would invest  72.00  in Adhera Therapeutics on October 22, 2024 and sell it today you would earn a total of  0.00  from holding Adhera Therapeutics or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	2.5%
Values	Daily Returns

Alector  vs.  Adhera Therapeutics

Alector

Risk-Adjusted Performance

0 of 100

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 February 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Adhera Therapeutics

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Alector and Adhera Therapeutics

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

The idea behind Alector and Adhera Therapeutics 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.