Correlation Between Amylyx Pharmaceuticals and Bolt Biotherapeutics

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

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

Diversification Opportunities for Amylyx Pharmaceuticals and Bolt Biotherapeutics

0.24

Correlation Coefficient

Amylyx Pharmaceuticals  Bolt Biotherapeutics

Modest diversification

The 3 months correlation between Amylyx and Bolt is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding Amylyx Pharmaceuticals and Bolt Biotherapeutics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bolt Biotherapeutics and Amylyx Pharmaceuticals 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 Amylyx Pharmaceuticals are associated (or correlated) with Bolt Biotherapeutics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bolt Biotherapeutics has no effect on the direction of Amylyx Pharmaceuticals i.e., Amylyx Pharmaceuticals and Bolt Biotherapeutics go up and down completely randomly.

Pair Corralation between Amylyx Pharmaceuticals and Bolt Biotherapeutics

Given the investment horizon of 90 days Amylyx Pharmaceuticals is expected to generate 1.9 times more return on investment than Bolt Biotherapeutics. However, Amylyx Pharmaceuticals is 1.9 times more volatile than Bolt Biotherapeutics. It trades about -0.01 of its potential returns per unit of risk. Bolt Biotherapeutics is currently generating about -0.05 per unit of risk. If you would invest  1,625  in Amylyx Pharmaceuticals on October 7, 2024 and sell it today you would lose (1,210) from holding Amylyx Pharmaceuticals or give up 74.46% of portfolio value over 90 days.

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

Amylyx Pharmaceuticals  vs.  Bolt Biotherapeutics

Amylyx Pharmaceuticals

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Amylyx Pharmaceuticals are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unfluctuating essential indicators, Amylyx Pharmaceuticals showed solid returns over the last few months and may actually be approaching a breakup point.

Bolt Biotherapeutics

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Bolt Biotherapeutics has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's essential indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with Amylyx Pharmaceuticals and Bolt Biotherapeutics

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

The idea behind Amylyx Pharmaceuticals and Bolt Biotherapeutics 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.

Check out your portfolio center.

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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.