Correlation Between Alpha Tau and Cardio Diagnostics

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

By analyzing existing cross correlation between Alpha Tau Medical and Cardio Diagnostics Holdings, you can compare the effects of market volatilities on Alpha Tau and Cardio Diagnostics 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 Alpha Tau with a short position of Cardio Diagnostics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alpha Tau and Cardio Diagnostics.

Diversification Opportunities for Alpha Tau and Cardio Diagnostics

0.59

Correlation Coefficient

Alpha Tau  Cardio Diagnostics

Very weak diversification

The 3 months correlation between Alpha and Cardio is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding Alpha Tau Medical and Cardio Diagnostics Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cardio Diagnostics and Alpha Tau 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 Alpha Tau Medical are associated (or correlated) with Cardio Diagnostics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cardio Diagnostics has no effect on the direction of Alpha Tau i.e., Alpha Tau and Cardio Diagnostics go up and down completely randomly.

Pair Corralation between Alpha Tau and Cardio Diagnostics

Given the investment horizon of 90 days Alpha Tau Medical is expected to generate 0.71 times more return on investment than Cardio Diagnostics. However, Alpha Tau Medical is 1.4 times less risky than Cardio Diagnostics. It trades about 0.29 of its potential returns per unit of risk. Cardio Diagnostics Holdings is currently generating about -0.49 per unit of risk. If you would invest  308.00  in Alpha Tau Medical on October 23, 2024 and sell it today you would earn a total of  83.00  from holding Alpha Tau Medical or generate 26.95% return on investment over 90 days.

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

Alpha Tau Medical  vs.  Cardio Diagnostics Holdings

Alpha Tau Medical

Risk-Adjusted Performance

20 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Alpha Tau Medical are ranked lower than 20 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, Alpha Tau unveiled solid returns over the last few months and may actually be approaching a breakup point.

Cardio Diagnostics

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Cardio Diagnostics Holdings are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of very weak forward indicators, Cardio Diagnostics displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Alpha Tau and Cardio Diagnostics

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

The idea behind Alpha Tau Medical and Cardio Diagnostics Holdings 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.