Correlation Between Alpha Tau and Sellas Life

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

Diversification Opportunities for Alpha Tau and Sellas Life

0.52

Correlation Coefficient

Alpha Tau  Sellas Life

Very weak diversification

The 3 months correlation between Alpha and Sellas is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding Alpha Tau Medical and Sellas Life Sciences in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sellas Life Sciences 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 Sellas Life. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sellas Life Sciences has no effect on the direction of Alpha Tau i.e., Alpha Tau and Sellas Life go up and down completely randomly.

Pair Corralation between Alpha Tau and Sellas Life

Assuming the 90 days horizon Alpha Tau Medical is expected to generate 3.83 times more return on investment than Sellas Life. However, Alpha Tau is 3.83 times more volatile than Sellas Life Sciences. It trades about -0.02 of its potential returns per unit of risk. Sellas Life Sciences is currently generating about -0.32 per unit of risk. If you would invest  36.00  in Alpha Tau Medical on December 3, 2024 and sell it today you would lose (6.17) from holding Alpha Tau Medical or give up 17.14% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	80.95%
Values	Daily Returns

Alpha Tau Medical  vs.  Sellas Life Sciences

Alpha Tau Medical

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Alpha Tau Medical are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. 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.

Sellas Life Sciences

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Sellas Life Sciences are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak essential indicators, Sellas Life unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Alpha Tau and Sellas Life

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

The idea behind Alpha Tau Medical and Sellas Life Sciences 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.