Correlation Between Alta Equipment and Eupraxia Pharmaceuticals

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

By analyzing existing cross correlation between Alta Equipment Group and Eupraxia Pharmaceuticals Common, you can compare the effects of market volatilities on Alta Equipment and Eupraxia Pharmaceuticals 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 Alta Equipment with a short position of Eupraxia Pharmaceuticals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alta Equipment and Eupraxia Pharmaceuticals.

Diversification Opportunities for Alta Equipment and Eupraxia Pharmaceuticals

0.75

Correlation Coefficient

Alta Equipment  Eupraxia Pharmaceuticals

Poor diversification

The 3 months correlation between Alta and Eupraxia is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Alta Equipment Group and Eupraxia Pharmaceuticals Commo in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eupraxia Pharmaceuticals and Alta Equipment 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 Alta Equipment Group are associated (or correlated) with Eupraxia Pharmaceuticals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eupraxia Pharmaceuticals has no effect on the direction of Alta Equipment i.e., Alta Equipment and Eupraxia Pharmaceuticals go up and down completely randomly.

Pair Corralation between Alta Equipment and Eupraxia Pharmaceuticals

Given the investment horizon of 90 days Alta Equipment is expected to generate 1.96 times less return on investment than Eupraxia Pharmaceuticals. But when comparing it to its historical volatility, Alta Equipment Group is 1.33 times less risky than Eupraxia Pharmaceuticals. It trades about 0.08 of its potential returns per unit of risk. Eupraxia Pharmaceuticals Common is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest  230.00  in Eupraxia Pharmaceuticals Common on October 8, 2024 and sell it today you would earn a total of  80.00  from holding Eupraxia Pharmaceuticals Common or generate 34.78% return on investment over 90 days.

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

Alta Equipment Group  vs.  Eupraxia Pharmaceuticals Commo

Alta Equipment Group

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Alta Equipment Group are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Alta Equipment reported solid returns over the last few months and may actually be approaching a breakup point.

Eupraxia Pharmaceuticals

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Eupraxia Pharmaceuticals Common are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Eupraxia Pharmaceuticals showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Alta Equipment and Eupraxia Pharmaceuticals

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

The idea behind Alta Equipment Group and Eupraxia Pharmaceuticals Common 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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.