Correlation Between GRI Bio and Amylyx Pharmaceuticals

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

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

Diversification Opportunities for GRI Bio and Amylyx Pharmaceuticals

0.72

Correlation Coefficient

GRI Bio  Amylyx Pharmaceuticals

Poor diversification

The 3 months correlation between GRI and Amylyx is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding GRI Bio and Amylyx Pharmaceuticals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Amylyx Pharmaceuticals and GRI Bio 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 GRI Bio are associated (or correlated) with Amylyx Pharmaceuticals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Amylyx Pharmaceuticals has no effect on the direction of GRI Bio i.e., GRI Bio and Amylyx Pharmaceuticals go up and down completely randomly.

Pair Corralation between GRI Bio and Amylyx Pharmaceuticals

Considering the 90-day investment horizon GRI Bio is expected to generate 1.8 times more return on investment than Amylyx Pharmaceuticals. However, GRI Bio is 1.8 times more volatile than Amylyx Pharmaceuticals. It trades about 0.15 of its potential returns per unit of risk. Amylyx Pharmaceuticals is currently generating about -0.3 per unit of risk. If you would invest  64.00  in GRI Bio on September 21, 2024 and sell it today you would earn a total of  13.00  from holding GRI Bio or generate 20.31% return on investment over 90 days.

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

GRI Bio  vs.  Amylyx Pharmaceuticals

GRI Bio

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in GRI Bio are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite fairly weak basic indicators, GRI Bio demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Amylyx Pharmaceuticals

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Amylyx Pharmaceuticals are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unfluctuating essential indicators, Amylyx Pharmaceuticals showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with GRI Bio and Amylyx Pharmaceuticals

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

The idea behind GRI Bio and Amylyx Pharmaceuticals 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.