Correlation Between Legend Biotech and Altimmune

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

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

Diversification Opportunities for Legend Biotech and Altimmune

-0.61

Correlation Coefficient

Legend Biotech  Altimmune

Excellent diversification

The 3 months correlation between Legend and Altimmune is -0.61. Overlapping area represents the amount of risk that can be diversified away by holding Legend Biotech Corp and Altimmune in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Altimmune and Legend Biotech 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 Legend Biotech Corp are associated (or correlated) with Altimmune. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Altimmune has no effect on the direction of Legend Biotech i.e., Legend Biotech and Altimmune go up and down completely randomly.

Pair Corralation between Legend Biotech and Altimmune

Given the investment horizon of 90 days Legend Biotech Corp is expected to under-perform the Altimmune. But the stock apears to be less risky and, when comparing its historical volatility, Legend Biotech Corp is 1.99 times less risky than Altimmune. The stock trades about -0.06 of its potential returns per unit of risk. The Altimmune is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest  1,172  in Altimmune on October 5, 2024 and sell it today you would lose (451.00) from holding Altimmune or give up 38.48% of portfolio value over 90 days.

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

Legend Biotech Corp  vs.  Altimmune

Legend Biotech Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Legend Biotech Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's technical and fundamental indicators remain very healthy which may send shares a bit higher in February 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Altimmune

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Altimmune are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively inconsistent essential indicators, Altimmune unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Legend Biotech and Altimmune

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

The idea behind Legend Biotech Corp and Altimmune 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.