Correlation Between Graphite Bio and Armata Pharmaceuticals

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

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

Diversification Opportunities for Graphite Bio and Armata Pharmaceuticals

-0.12

Correlation Coefficient

Graphite Bio  Armata Pharmaceuticals

Good diversification

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

Pair Corralation between Graphite Bio and Armata Pharmaceuticals

If you would invest  240.00  in Armata Pharmaceuticals on September 2, 2024 and sell it today you would lose (10.00) from holding Armata Pharmaceuticals or give up 4.17% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	1.56%
Values	Daily Returns

Graphite Bio  vs.  Armata Pharmaceuticals

Graphite Bio

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Graphite Bio has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong basic indicators, Graphite Bio is not utilizing all of its potentials. The current stock price confusion, may contribute to short-horizon losses for the traders.

Armata Pharmaceuticals

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Graphite Bio and Armata Pharmaceuticals

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

The idea behind Graphite Bio and Armata 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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.