Correlation Between Apellis Pharmaceuticals and Alterity Therapeutics

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

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

Diversification Opportunities for Apellis Pharmaceuticals and Alterity Therapeutics

0.52

Correlation Coefficient

Apellis Pharmaceuticals  Alterity Therapeutics

Very weak diversification

The 3 months correlation between Apellis and Alterity is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding Apellis Pharmaceuticals and Alterity Therapeutics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alterity Therapeutics 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 Alterity Therapeutics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alterity Therapeutics has no effect on the direction of Apellis Pharmaceuticals i.e., Apellis Pharmaceuticals and Alterity Therapeutics go up and down completely randomly.

Pair Corralation between Apellis Pharmaceuticals and Alterity Therapeutics

Given the investment horizon of 90 days Apellis Pharmaceuticals is expected to generate 9.31 times less return on investment than Alterity Therapeutics. But when comparing it to its historical volatility, Apellis Pharmaceuticals is 1.95 times less risky than Alterity Therapeutics. It trades about 0.01 of its potential returns per unit of risk. Alterity Therapeutics is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  409.00  in Alterity Therapeutics on October 10, 2024 and sell it today you would lose (37.00) from holding Alterity Therapeutics or give up 9.05% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	99.6%
Values	Daily Returns

Apellis Pharmaceuticals  vs.  Alterity Therapeutics

Apellis Pharmaceuticals

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Apellis Pharmaceuticals are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak essential indicators, Apellis Pharmaceuticals unveiled solid returns over the last few months and may actually be approaching a breakup point.

Alterity Therapeutics

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Alterity Therapeutics are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak technical indicators, Alterity Therapeutics exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Apellis Pharmaceuticals and Alterity Therapeutics

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

The idea behind Apellis Pharmaceuticals and Alterity Therapeutics 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.