Correlation Between Amylyx Pharmaceuticals and SSGA Active

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

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

Diversification Opportunities for Amylyx Pharmaceuticals and SSGA Active

-0.55

Correlation Coefficient

Amylyx Pharmaceuticals  SSGA Active

Excellent diversification

The 3 months correlation between Amylyx and SSGA is -0.55. Overlapping area represents the amount of risk that can be diversified away by holding Amylyx Pharmaceuticals and SSGA Active Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SSGA Active Trust 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 SSGA Active. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SSGA Active Trust has no effect on the direction of Amylyx Pharmaceuticals i.e., Amylyx Pharmaceuticals and SSGA Active go up and down completely randomly.

Pair Corralation between Amylyx Pharmaceuticals and SSGA Active

Given the investment horizon of 90 days Amylyx Pharmaceuticals is expected to under-perform the SSGA Active. In addition to that, Amylyx Pharmaceuticals is 22.47 times more volatile than SSGA Active Trust. It trades about -0.22 of its total potential returns per unit of risk. SSGA Active Trust is currently generating about -0.06 per unit of volatility. If you would invest  2,968  in SSGA Active Trust on September 20, 2024 and sell it today you would lose (7.00) from holding SSGA Active Trust or give up 0.24% of portfolio value over 90 days.

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

Amylyx Pharmaceuticals  vs.  SSGA Active Trust

Amylyx Pharmaceuticals

Risk-Adjusted Performance

9 of 100

OK

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

SSGA Active Trust

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days SSGA Active Trust has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, SSGA Active is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Amylyx Pharmaceuticals and SSGA Active

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

The idea behind Amylyx Pharmaceuticals and SSGA Active Trust 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.