Correlation Between Eterna Therapeutics and Alpha Teknova

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

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

Diversification Opportunities for Eterna Therapeutics and Alpha Teknova

-0.05

Correlation Coefficient

Eterna Therapeutics  Alpha Teknova

Good diversification

The 3 months correlation between Eterna and Alpha is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding Eterna Therapeutics and Alpha Teknova in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alpha Teknova and Eterna Therapeutics 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 Eterna Therapeutics are associated (or correlated) with Alpha Teknova. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alpha Teknova has no effect on the direction of Eterna Therapeutics i.e., Eterna Therapeutics and Alpha Teknova go up and down completely randomly.

Pair Corralation between Eterna Therapeutics and Alpha Teknova

Given the investment horizon of 90 days Eterna Therapeutics is expected to generate 2.07 times more return on investment than Alpha Teknova. However, Eterna Therapeutics is 2.07 times more volatile than Alpha Teknova. It trades about -0.11 of its potential returns per unit of risk. Alpha Teknova is currently generating about -0.37 per unit of risk. If you would invest  38.00  in Eterna Therapeutics on December 2, 2024 and sell it today you would lose (8.00) from holding Eterna Therapeutics or give up 21.05% of portfolio value over 90 days.

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

Eterna Therapeutics  vs.  Alpha Teknova

Eterna Therapeutics

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Eterna Therapeutics are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat uncertain basic indicators, Eterna Therapeutics may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Alpha Teknova

Risk-Adjusted Performance

Very Weak

Over the last 90 days Alpha Teknova has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Alpha Teknova is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Eterna Therapeutics and Alpha Teknova

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

The idea behind Eterna Therapeutics and Alpha Teknova 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.