Correlation Between Amylyx Pharmaceuticals and Galecto

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

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

Diversification Opportunities for Amylyx Pharmaceuticals and Galecto

-0.8

Correlation Coefficient

Amylyx Pharmaceuticals  Galecto

Pay attention - limited upside

The 3 months correlation between Amylyx and Galecto is -0.8. Overlapping area represents the amount of risk that can be diversified away by holding Amylyx Pharmaceuticals and Galecto in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Galecto 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 Galecto. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Galecto has no effect on the direction of Amylyx Pharmaceuticals i.e., Amylyx Pharmaceuticals and Galecto go up and down completely randomly.

Pair Corralation between Amylyx Pharmaceuticals and Galecto

Given the investment horizon of 90 days Amylyx Pharmaceuticals is expected to generate 1.14 times more return on investment than Galecto. However, Amylyx Pharmaceuticals is 1.14 times more volatile than Galecto. It trades about 0.19 of its potential returns per unit of risk. Galecto is currently generating about -0.26 per unit of risk. If you would invest  249.00  in Amylyx Pharmaceuticals on September 12, 2024 and sell it today you would earn a total of  202.00  from holding Amylyx Pharmaceuticals or generate 81.12% return on investment over 90 days.

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

Amylyx Pharmaceuticals  vs.  Galecto

Amylyx Pharmaceuticals

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Amylyx Pharmaceuticals are ranked lower than 15 (%) 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.

Galecto

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Galecto has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in January 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with Amylyx Pharmaceuticals and Galecto

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

The idea behind Amylyx Pharmaceuticals and Galecto 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.