Correlation Between ChitogenX and Allena Pharmaceuticals

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

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

Diversification Opportunities for ChitogenX and Allena Pharmaceuticals

0.25

Correlation Coefficient

ChitogenX  Allena Pharmaceuticals

Modest diversification

The 3 months correlation between ChitogenX and Allena is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding ChitogenX and Allena Pharmaceuticals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Allena Pharmaceuticals and ChitogenX 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 ChitogenX are associated (or correlated) with Allena Pharmaceuticals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Allena Pharmaceuticals has no effect on the direction of ChitogenX i.e., ChitogenX and Allena Pharmaceuticals go up and down completely randomly.

Pair Corralation between ChitogenX and Allena Pharmaceuticals

If you would invest  0.20  in Allena Pharmaceuticals on September 1, 2024 and sell it today you would earn a total of  0.00  from holding Allena Pharmaceuticals or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	1.56%
Values	Daily Returns

ChitogenX  vs.  Allena Pharmaceuticals

ChitogenX

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ChitogenX has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in December 2024. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Allena Pharmaceuticals

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Allena Pharmaceuticals has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, Allena Pharmaceuticals is not utilizing all of its potentials. The current stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with ChitogenX and Allena Pharmaceuticals

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

The idea behind ChitogenX and Allena 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.

Check out your portfolio center.

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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.