Correlation Between Armata Pharmaceuticals and Histogen

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

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

Diversification Opportunities for Armata Pharmaceuticals and Histogen

0.15

Correlation Coefficient

Armata Pharmaceuticals  Histogen

Average diversification

The 3 months correlation between Armata and Histogen is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding Armata Pharmaceuticals and Histogen in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Histogen and Armata 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 Armata Pharmaceuticals are associated (or correlated) with Histogen. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Histogen has no effect on the direction of Armata Pharmaceuticals i.e., Armata Pharmaceuticals and Histogen go up and down completely randomly.

Pair Corralation between Armata Pharmaceuticals and Histogen

Given the investment horizon of 90 days Armata Pharmaceuticals is expected to under-perform the Histogen. But the stock apears to be less risky and, when comparing its historical volatility, Armata Pharmaceuticals is 1.22 times less risky than Histogen. The stock trades about -0.07 of its potential returns per unit of risk. The Histogen is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  2.60  in Histogen on December 29, 2024 and sell it today you would earn a total of  0.10  from holding Histogen or generate 3.85% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	32.79%
Values	Daily Returns

Armata Pharmaceuticals  vs.  Histogen

Armata Pharmaceuticals

Risk-Adjusted Performance

Very Weak

Over the last 90 days Armata Pharmaceuticals has generated negative risk-adjusted returns adding no value to investors with long positions. Even with abnormal performance in the last few months, the Stock's primary indicators remain relatively invariable which may send shares a bit higher in April 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Histogen

Risk-Adjusted Performance

Modest

Over the last 90 days Histogen has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very weak basic indicators, Histogen displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Armata Pharmaceuticals and Histogen

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

The idea behind Armata Pharmaceuticals and Histogen 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.