Correlation Between Denali Therapeutics and Actinium Pharmaceuticals

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

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

Diversification Opportunities for Denali Therapeutics and Actinium Pharmaceuticals

-0.07

Correlation Coefficient

Denali Therapeutics  Actinium Pharmaceuticals

Good diversification

The 3 months correlation between Denali and Actinium is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding Denali Therapeutics and Actinium Pharmaceuticals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Actinium Pharmaceuticals and Denali Therapeutics 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 Denali Therapeutics are associated (or correlated) with Actinium Pharmaceuticals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Actinium Pharmaceuticals has no effect on the direction of Denali Therapeutics i.e., Denali Therapeutics and Actinium Pharmaceuticals go up and down completely randomly.

Pair Corralation between Denali Therapeutics and Actinium Pharmaceuticals

Given the investment horizon of 90 days Denali Therapeutics is expected to under-perform the Actinium Pharmaceuticals. But the stock apears to be less risky and, when comparing its historical volatility, Denali Therapeutics is 1.28 times less risky than Actinium Pharmaceuticals. The stock trades about -0.13 of its potential returns per unit of risk. The Actinium Pharmaceuticals is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest  129.00  in Actinium Pharmaceuticals on December 26, 2024 and sell it today you would earn a total of  58.00  from holding Actinium Pharmaceuticals or generate 44.96% return on investment over 90 days.

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

Denali Therapeutics  vs.  Actinium Pharmaceuticals

Denali Therapeutics

Risk-Adjusted Performance

Very Weak

Over the last 90 days Denali Therapeutics has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's essential indicators remain fairly strong which may send shares a bit higher in April 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Actinium Pharmaceuticals

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Actinium Pharmaceuticals are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of very uncertain basic indicators, Actinium Pharmaceuticals displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Denali Therapeutics and Actinium Pharmaceuticals

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

The idea behind Denali Therapeutics and Actinium 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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.