Correlation Between Cabaletta Bio and Athira Pharma

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

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

Diversification Opportunities for Cabaletta Bio and Athira Pharma

-0.41

Correlation Coefficient

Cabaletta Bio  Athira Pharma

Very good diversification

The 3 months correlation between Cabaletta and Athira is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding Cabaletta Bio and Athira Pharma in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Athira Pharma and Cabaletta Bio 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 Cabaletta Bio are associated (or correlated) with Athira Pharma. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Athira Pharma has no effect on the direction of Cabaletta Bio i.e., Cabaletta Bio and Athira Pharma go up and down completely randomly.

Pair Corralation between Cabaletta Bio and Athira Pharma

Given the investment horizon of 90 days Cabaletta Bio is expected to under-perform the Athira Pharma. But the stock apears to be less risky and, when comparing its historical volatility, Cabaletta Bio is 1.02 times less risky than Athira Pharma. The stock trades about -0.01 of its potential returns per unit of risk. The Athira Pharma is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest  338.00  in Athira Pharma on September 23, 2024 and sell it today you would lose (280.00) from holding Athira Pharma or give up 82.84% of portfolio value over 90 days.

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

Cabaletta Bio  vs.  Athira Pharma

Cabaletta Bio

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Cabaletta Bio 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 fundamental drivers remain somewhat strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Athira Pharma

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Athira Pharma are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak technical indicators, Athira Pharma sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Cabaletta Bio and Athira Pharma

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

The idea behind Cabaletta Bio and Athira Pharma 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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.