Correlation Between Applied Molecular and AIM ImmunoTech

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

By analyzing existing cross correlation between Applied Molecular Transport and AIM ImmunoTech, you can compare the effects of market volatilities on Applied Molecular and AIM ImmunoTech 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 Applied Molecular with a short position of AIM ImmunoTech. Check out your portfolio center. Please also check ongoing floating volatility patterns of Applied Molecular and AIM ImmunoTech.

Diversification Opportunities for Applied Molecular and AIM ImmunoTech

-0.19

Correlation Coefficient

Applied Molecular  AIM ImmunoTech

Good diversification

The 3 months correlation between Applied and AIM is -0.19. Overlapping area represents the amount of risk that can be diversified away by holding Applied Molecular Transport and AIM ImmunoTech in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AIM ImmunoTech and Applied Molecular 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 Applied Molecular Transport are associated (or correlated) with AIM ImmunoTech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AIM ImmunoTech has no effect on the direction of Applied Molecular i.e., Applied Molecular and AIM ImmunoTech go up and down completely randomly.

Pair Corralation between Applied Molecular and AIM ImmunoTech

Given the investment horizon of 90 days Applied Molecular Transport is expected to under-perform the AIM ImmunoTech. In addition to that, Applied Molecular is 1.61 times more volatile than AIM ImmunoTech. It trades about -0.02 of its total potential returns per unit of risk. AIM ImmunoTech is currently generating about -0.01 per unit of volatility. If you would invest  54.00  in AIM ImmunoTech on October 24, 2024 and sell it today you would lose (31.00) from holding AIM ImmunoTech or give up 57.41% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	24.09%
Values	Daily Returns

Applied Molecular Transport  vs.  AIM ImmunoTech

Applied Molecular

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Applied Molecular Transport has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong basic indicators, Applied Molecular is not utilizing all of its potentials. The recent stock price confusion, may contribute to short-horizon losses for the traders.

AIM ImmunoTech

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days AIM ImmunoTech has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy forward indicators, AIM ImmunoTech is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Applied Molecular and AIM ImmunoTech

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

The idea behind Applied Molecular Transport and AIM ImmunoTech 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.