Correlation Between Atara Biotherapeutics and Intercept Pharmaceuticals

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

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

Diversification Opportunities for Atara Biotherapeutics and Intercept Pharmaceuticals

-0.62

Correlation Coefficient

Atara Biotherapeutics  Intercept Pharmaceuticals

Excellent diversification

The 3 months correlation between Atara and Intercept is -0.62. Overlapping area represents the amount of risk that can be diversified away by holding Atara Biotherapeutics and Intercept Pharmaceuticals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Intercept Pharmaceuticals and Atara Biotherapeutics 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 Atara Biotherapeutics are associated (or correlated) with Intercept Pharmaceuticals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Intercept Pharmaceuticals has no effect on the direction of Atara Biotherapeutics i.e., Atara Biotherapeutics and Intercept Pharmaceuticals go up and down completely randomly.

Pair Corralation between Atara Biotherapeutics and Intercept Pharmaceuticals

Given the investment horizon of 90 days Atara Biotherapeutics is expected to generate 2.93 times less return on investment than Intercept Pharmaceuticals. In addition to that, Atara Biotherapeutics is 1.69 times more volatile than Intercept Pharmaceuticals. It trades about 0.0 of its total potential returns per unit of risk. Intercept Pharmaceuticals is currently generating about 0.01 per unit of volatility. If you would invest  1,173  in Intercept Pharmaceuticals on September 18, 2024 and sell it today you would lose (142.00) from holding Intercept Pharmaceuticals or give up 12.11% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	28.89%
Values	Daily Returns

Atara Biotherapeutics  vs.  Intercept Pharmaceuticals

Atara Biotherapeutics

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Atara Biotherapeutics are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite somewhat inconsistent basic indicators, Atara Biotherapeutics sustained solid returns over the last few months and may actually be approaching a breakup point.

Intercept Pharmaceuticals

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Intercept Pharmaceuticals has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Intercept Pharmaceuticals is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Atara Biotherapeutics and Intercept Pharmaceuticals

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

The idea behind Atara Biotherapeutics and Intercept Pharmaceuticals 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..