Correlation Between Allarity Therapeutics and Creative Medical

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

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

Diversification Opportunities for Allarity Therapeutics and Creative Medical

-0.39

Correlation Coefficient

Allarity Therapeutics  Creative Medical

Very good diversification

The 3 months correlation between Allarity and Creative is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding Allarity Therapeutics and Creative Medical Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Creative Medical Tec and Allarity Therapeutics 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 Allarity Therapeutics are associated (or correlated) with Creative Medical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Creative Medical Tec has no effect on the direction of Allarity Therapeutics i.e., Allarity Therapeutics and Creative Medical go up and down completely randomly.

Pair Corralation between Allarity Therapeutics and Creative Medical

Given the investment horizon of 90 days Allarity Therapeutics is expected to generate 8.25 times less return on investment than Creative Medical. But when comparing it to its historical volatility, Allarity Therapeutics is 1.15 times less risky than Creative Medical. It trades about 0.01 of its potential returns per unit of risk. Creative Medical Technology is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  217.00  in Creative Medical Technology on December 21, 2024 and sell it today you would earn a total of  61.00  from holding Creative Medical Technology or generate 28.11% return on investment over 90 days.

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

Allarity Therapeutics  vs.  Creative Medical Technology

Allarity Therapeutics

Risk-Adjusted Performance

Weak

Over the last 90 days Allarity Therapeutics has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable essential indicators, Allarity Therapeutics is not utilizing all of its potentials. The current stock price agitation, may contribute to short-term losses for the retail investors.

Creative Medical Tec

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Creative Medical Technology are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak essential indicators, Creative Medical showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Allarity Therapeutics and Creative Medical

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

The idea behind Allarity Therapeutics and Creative Medical Technology 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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.