Correlation Between Amylyx Pharmaceuticals and Icosavax

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

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

Diversification Opportunities for Amylyx Pharmaceuticals and Icosavax

0.67

Correlation Coefficient

Amylyx Pharmaceuticals  Icosavax

Poor diversification

The 3 months correlation between Amylyx and Icosavax is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Amylyx Pharmaceuticals and Icosavax in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Icosavax 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 Icosavax. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Icosavax has no effect on the direction of Amylyx Pharmaceuticals i.e., Amylyx Pharmaceuticals and Icosavax go up and down completely randomly.

Pair Corralation between Amylyx Pharmaceuticals and Icosavax

If you would invest  507.00  in Amylyx Pharmaceuticals on August 30, 2024 and sell it today you would earn a total of  67.00  from holding Amylyx Pharmaceuticals or generate 13.21% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	4.35%
Values	Daily Returns

Amylyx Pharmaceuticals  vs.  Icosavax

Amylyx Pharmaceuticals

Risk-Adjusted Performance

22 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Amylyx Pharmaceuticals are ranked lower than 22 (%) 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.

Icosavax

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Icosavax has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, Icosavax is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Amylyx Pharmaceuticals and Icosavax

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

The idea behind Amylyx Pharmaceuticals and Icosavax 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.