Correlation Between Amylyx Pharmaceuticals and MoonLake Immunotherapeuti

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

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

Diversification Opportunities for Amylyx Pharmaceuticals and MoonLake Immunotherapeuti

0.07

Correlation Coefficient

Amylyx Pharmaceuticals  MoonLake Immunotherapeuti

Significant diversification

The 3 months correlation between Amylyx and MoonLake is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding Amylyx Pharmaceuticals and MoonLake Immunotherapeutics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MoonLake Immunotherapeuti 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 MoonLake Immunotherapeuti. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MoonLake Immunotherapeuti has no effect on the direction of Amylyx Pharmaceuticals i.e., Amylyx Pharmaceuticals and MoonLake Immunotherapeuti go up and down completely randomly.

Pair Corralation between Amylyx Pharmaceuticals and MoonLake Immunotherapeuti

Given the investment horizon of 90 days Amylyx Pharmaceuticals is expected to generate 1.8 times more return on investment than MoonLake Immunotherapeuti. However, Amylyx Pharmaceuticals is 1.8 times more volatile than MoonLake Immunotherapeutics. It trades about 0.29 of its potential returns per unit of risk. MoonLake Immunotherapeutics is currently generating about 0.1 per unit of risk. If you would invest  216.00  in Amylyx Pharmaceuticals on September 3, 2024 and sell it today you would earn a total of  338.00  from holding Amylyx Pharmaceuticals or generate 156.48% return on investment over 90 days.

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

Amylyx Pharmaceuticals  vs.  MoonLake Immunotherapeutics

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.

MoonLake Immunotherapeuti

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in MoonLake Immunotherapeutics are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, MoonLake Immunotherapeuti showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Amylyx Pharmaceuticals and MoonLake Immunotherapeuti

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

The idea behind Amylyx Pharmaceuticals and MoonLake Immunotherapeutics 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .