Correlation Between ATAI Life and Mind Medicine

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

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

Diversification Opportunities for ATAI Life and Mind Medicine

0.74

Correlation Coefficient

ATAI Life  Mind Medicine

Poor diversification

The 3 months correlation between ATAI and Mind is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding ATAI Life Sciences and Mind Medicine in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mind Medicine and ATAI Life 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 ATAI Life Sciences are associated (or correlated) with Mind Medicine. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mind Medicine has no effect on the direction of ATAI Life i.e., ATAI Life and Mind Medicine go up and down completely randomly.

Pair Corralation between ATAI Life and Mind Medicine

Given the investment horizon of 90 days ATAI Life Sciences is expected to generate 1.25 times more return on investment than Mind Medicine. However, ATAI Life is 1.25 times more volatile than Mind Medicine. It trades about 0.09 of its potential returns per unit of risk. Mind Medicine is currently generating about 0.0 per unit of risk. If you would invest  125.00  in ATAI Life Sciences on December 26, 2024 and sell it today you would earn a total of  32.00  from holding ATAI Life Sciences or generate 25.6% return on investment over 90 days.

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

ATAI Life Sciences  vs.  Mind Medicine

ATAI Life Sciences

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in ATAI Life Sciences are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite fairly unsteady basic indicators, ATAI Life demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Mind Medicine

Risk-Adjusted Performance

Very Weak

Over the last 90 days Mind Medicine has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound primary indicators, Mind Medicine is not utilizing all of its potentials. The recent stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with ATAI Life and Mind Medicine

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

The idea behind ATAI Life Sciences and Mind Medicine 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.