Correlation Between Apellis Pharmaceuticals and Agios Pharm

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

By analyzing existing cross correlation between Apellis Pharmaceuticals and Agios Pharm, you can compare the effects of market volatilities on Apellis Pharmaceuticals and Agios Pharm 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 Apellis Pharmaceuticals with a short position of Agios Pharm. Check out your portfolio center. Please also check ongoing floating volatility patterns of Apellis Pharmaceuticals and Agios Pharm.

Diversification Opportunities for Apellis Pharmaceuticals and Agios Pharm

0.2

Correlation Coefficient

Apellis Pharmaceuticals  Agios Pharm

Modest diversification

The 3 months correlation between Apellis and Agios is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding Apellis Pharmaceuticals and Agios Pharm in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Agios Pharm and Apellis 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 Apellis Pharmaceuticals are associated (or correlated) with Agios Pharm. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Agios Pharm has no effect on the direction of Apellis Pharmaceuticals i.e., Apellis Pharmaceuticals and Agios Pharm go up and down completely randomly.

Pair Corralation between Apellis Pharmaceuticals and Agios Pharm

Given the investment horizon of 90 days Apellis Pharmaceuticals is expected to under-perform the Agios Pharm. But the stock apears to be less risky and, when comparing its historical volatility, Apellis Pharmaceuticals is 1.17 times less risky than Agios Pharm. The stock trades about -0.01 of its potential returns per unit of risk. The Agios Pharm is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  4,492  in Agios Pharm on September 12, 2024 and sell it today you would earn a total of  148.00  from holding Agios Pharm or generate 3.29% return on investment over 90 days.

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

Apellis Pharmaceuticals  vs.  Agios Pharm

Apellis Pharmaceuticals

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Apellis Pharmaceuticals has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable essential indicators, Apellis Pharmaceuticals is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Agios Pharm

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Agios Pharm are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of very weak forward indicators, Agios Pharm may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Apellis Pharmaceuticals and Agios Pharm

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

The idea behind Apellis Pharmaceuticals and Agios Pharm 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.

Check out your portfolio center.

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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.