Correlation Between Equillium and ALT5 Sigma

Can any of the company-specific risk be diversified away by investing in both Equillium and ALT5 Sigma 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 Equillium and ALT5 Sigma into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Equillium and ALT5 Sigma, you can compare the effects of market volatilities on Equillium and ALT5 Sigma 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 Equillium with a short position of ALT5 Sigma. Check out your portfolio center. Please also check ongoing floating volatility patterns of Equillium and ALT5 Sigma.

Diversification Opportunities for Equillium and ALT5 Sigma

-0.19

Correlation Coefficient

Equillium  ALT5 Sigma

Good diversification

The 3 months correlation between Equillium and ALT5 is -0.19. Overlapping area represents the amount of risk that can be diversified away by holding Equillium and ALT5 Sigma in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ALT5 Sigma and Equillium 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 Equillium are associated (or correlated) with ALT5 Sigma. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ALT5 Sigma has no effect on the direction of Equillium i.e., Equillium and ALT5 Sigma go up and down completely randomly.

Pair Corralation between Equillium and ALT5 Sigma

Allowing for the 90-day total investment horizon Equillium is expected to under-perform the ALT5 Sigma. But the stock apears to be less risky and, when comparing its historical volatility, Equillium is 1.64 times less risky than ALT5 Sigma. The stock trades about -0.15 of its potential returns per unit of risk. The ALT5 Sigma is currently generating about 0.37 of returns per unit of risk over similar time horizon. If you would invest  219.00  in ALT5 Sigma on September 21, 2024 and sell it today you would earn a total of  123.00  from holding ALT5 Sigma or generate 56.16% return on investment over 90 days.

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

Equillium  vs.  ALT5 Sigma

Equillium

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Equillium has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, Equillium is not utilizing all of its potentials. The current stock price agitation, may contribute to short-term losses for the retail investors.

ALT5 Sigma

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in ALT5 Sigma are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, ALT5 Sigma unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Equillium and ALT5 Sigma

The main advantage of trading using opposite Equillium and ALT5 Sigma positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Equillium position performs unexpectedly, ALT5 Sigma 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 ALT5 Sigma will offset losses from the drop in ALT5 Sigma's long position.

The idea behind Equillium and ALT5 Sigma 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.