Correlation Between Alpha Tau and Chimerix

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

Diversification Opportunities for Alpha Tau and Chimerix

-0.12

Correlation Coefficient

Alpha Tau  Chimerix

Good diversification

The 3 months correlation between Alpha and Chimerix is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding Alpha Tau Medical and Chimerix in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chimerix 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 Chimerix. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chimerix has no effect on the direction of Alpha Tau i.e., Alpha Tau and Chimerix go up and down completely randomly.

Pair Corralation between Alpha Tau and Chimerix

Assuming the 90 days horizon Alpha Tau is expected to generate 1.08 times less return on investment than Chimerix. In addition to that, Alpha Tau is 1.84 times more volatile than Chimerix. It trades about 0.09 of its total potential returns per unit of risk. Chimerix is currently generating about 0.19 per unit of volatility. If you would invest  344.00  in Chimerix on December 28, 2024 and sell it today you would earn a total of  506.00  from holding Chimerix or generate 147.09% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	78.69%
Values	Daily Returns

Alpha Tau Medical  vs.  Chimerix

Alpha Tau Medical

Risk-Adjusted Performance

OK

Over the last 90 days Alpha Tau Medical has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly uncertain basic indicators, Alpha Tau showed solid returns over the last few months and may actually be approaching a breakup point.

Chimerix

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Chimerix are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Chimerix showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Alpha Tau and Chimerix

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

The idea behind Alpha Tau Medical and Chimerix 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.