Correlation Between Alpha Tau and Illumina

Can any of the company-specific risk be diversified away by investing in both Alpha Tau and Illumina 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 Illumina 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 Illumina, you can compare the effects of market volatilities on Alpha Tau and Illumina 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 Illumina. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alpha Tau and Illumina.

Diversification Opportunities for Alpha Tau and Illumina

-0.38

Correlation Coefficient

Alpha Tau  Illumina

Very good diversification

The 3 months correlation between Alpha and Illumina is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding Alpha Tau Medical and Illumina in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Illumina 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 Illumina. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Illumina has no effect on the direction of Alpha Tau i.e., Alpha Tau and Illumina go up and down completely randomly.

Pair Corralation between Alpha Tau and Illumina

Given the investment horizon of 90 days Alpha Tau Medical is expected to generate 1.37 times more return on investment than Illumina. However, Alpha Tau is 1.37 times more volatile than Illumina. It trades about 0.01 of its potential returns per unit of risk. Illumina is currently generating about -0.02 per unit of risk. If you would invest  413.00  in Alpha Tau Medical on October 12, 2024 and sell it today you would lose (57.00) from holding Alpha Tau Medical or give up 13.8% of portfolio value over 90 days.

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

Alpha Tau Medical  vs.  Illumina

Alpha Tau Medical

Risk-Adjusted Performance

22 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Alpha Tau Medical are ranked lower than 22 (%) 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.

Illumina

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Illumina has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unfluctuating performance, the Stock's primary indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Pair Trading with Alpha Tau and Illumina

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

The idea behind Alpha Tau Medical and Illumina 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 Commodity Directory module to find actively traded commodities issued by global exchanges.