Correlation Between Apellis Pharmaceuticals and Atara Biotherapeutics

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

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

Diversification Opportunities for Apellis Pharmaceuticals and Atara Biotherapeutics

0.72

Correlation Coefficient

Apellis Pharmaceuticals  Atara Biotherapeutics

Poor diversification

The 3 months correlation between Apellis and Atara is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Apellis Pharmaceuticals and Atara Biotherapeutics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Atara Biotherapeutics 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 Atara Biotherapeutics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Atara Biotherapeutics has no effect on the direction of Apellis Pharmaceuticals i.e., Apellis Pharmaceuticals and Atara Biotherapeutics go up and down completely randomly.

Pair Corralation between Apellis Pharmaceuticals and Atara Biotherapeutics

Given the investment horizon of 90 days Apellis Pharmaceuticals is expected to generate 0.35 times more return on investment than Atara Biotherapeutics. However, Apellis Pharmaceuticals is 2.82 times less risky than Atara Biotherapeutics. It trades about -0.15 of its potential returns per unit of risk. Atara Biotherapeutics is currently generating about -0.06 per unit of risk. If you would invest  3,268  in Apellis Pharmaceuticals on December 27, 2024 and sell it today you would lose (892.00) from holding Apellis Pharmaceuticals or give up 27.29% of portfolio value over 90 days.

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

Apellis Pharmaceuticals  vs.  Atara Biotherapeutics

Apellis Pharmaceuticals

Risk-Adjusted Performance

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 weak performance in the last few months, the Stock's essential indicators remain comparatively stable which may send shares a bit higher in April 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Atara Biotherapeutics

Risk-Adjusted Performance

Very Weak

Over the last 90 days Atara Biotherapeutics has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unsteady performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Apellis Pharmaceuticals and Atara Biotherapeutics

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

The idea behind Apellis Pharmaceuticals and Atara Biotherapeutics 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.