Correlation Between Apellis Pharmaceuticals and 4D Molecular

Can any of the company-specific risk be diversified away by investing in both Apellis Pharmaceuticals and 4D Molecular 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 4D Molecular into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Apellis Pharmaceuticals and 4D Molecular Therapeutics, you can compare the effects of market volatilities on Apellis Pharmaceuticals and 4D Molecular 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 4D Molecular. Check out your portfolio center. Please also check ongoing floating volatility patterns of Apellis Pharmaceuticals and 4D Molecular.

Diversification Opportunities for Apellis Pharmaceuticals and 4D Molecular

-0.76

Correlation Coefficient

Apellis Pharmaceuticals  4D Molecular

Pay attention - limited upside

The 3 months correlation between Apellis and FDMT is -0.76. Overlapping area represents the amount of risk that can be diversified away by holding Apellis Pharmaceuticals and 4D Molecular Therapeutics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on 4D Molecular 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 4D Molecular. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of 4D Molecular Therapeutics has no effect on the direction of Apellis Pharmaceuticals i.e., Apellis Pharmaceuticals and 4D Molecular go up and down completely randomly.

Pair Corralation between Apellis Pharmaceuticals and 4D Molecular

Given the investment horizon of 90 days Apellis Pharmaceuticals is expected to generate 0.75 times more return on investment than 4D Molecular. However, Apellis Pharmaceuticals is 1.33 times less risky than 4D Molecular. It trades about 0.0 of its potential returns per unit of risk. 4D Molecular Therapeutics is currently generating about -0.01 per unit of risk. If you would invest  5,169  in Apellis Pharmaceuticals on October 6, 2024 and sell it today you would lose (1,823) from holding Apellis Pharmaceuticals or give up 35.27% of portfolio value over 90 days.

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

Apellis Pharmaceuticals  vs.  4D Molecular Therapeutics

Apellis Pharmaceuticals

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Apellis Pharmaceuticals are ranked lower than 9 (%) 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.

4D Molecular Therapeutics

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days 4D Molecular Therapeutics 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 primary indicators remain comparatively stable which may send shares a bit higher in February 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Apellis Pharmaceuticals and 4D Molecular

The main advantage of trading using opposite Apellis Pharmaceuticals and 4D Molecular positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Apellis Pharmaceuticals position performs unexpectedly, 4D Molecular 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 4D Molecular will offset losses from the drop in 4D Molecular's long position.

The idea behind Apellis Pharmaceuticals and 4D Molecular 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.

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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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.