Correlation Between Altimmune and Cognition Therapeutics

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

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

Diversification Opportunities for Altimmune and Cognition Therapeutics

0.02

Correlation Coefficient

Altimmune  Cognition Therapeutics

Significant diversification

The 3 months correlation between Altimmune and Cognition is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding Altimmune and Cognition Therapeutics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cognition Therapeutics and Altimmune 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 Altimmune are associated (or correlated) with Cognition Therapeutics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cognition Therapeutics has no effect on the direction of Altimmune i.e., Altimmune and Cognition Therapeutics go up and down completely randomly.

Pair Corralation between Altimmune and Cognition Therapeutics

Considering the 90-day investment horizon Altimmune is expected to under-perform the Cognition Therapeutics. But the stock apears to be less risky and, when comparing its historical volatility, Altimmune is 1.78 times less risky than Cognition Therapeutics. The stock trades about -0.03 of its potential returns per unit of risk. The Cognition Therapeutics is currently generating about 0.26 of returns per unit of risk over similar time horizon. If you would invest  43.00  in Cognition Therapeutics on September 23, 2024 and sell it today you would earn a total of  20.00  from holding Cognition Therapeutics or generate 46.51% return on investment over 90 days.

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

Altimmune  vs.  Cognition Therapeutics

Altimmune

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Altimmune are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively inconsistent essential indicators, Altimmune unveiled solid returns over the last few months and may actually be approaching a breakup point.

Cognition Therapeutics

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Cognition Therapeutics are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unsteady basic indicators, Cognition Therapeutics showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Altimmune and Cognition Therapeutics

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

The idea behind Altimmune and Cognition 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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.