Correlation Between LIFE Old and X4 Pharmaceuticals

Can any of the company-specific risk be diversified away by investing in both LIFE Old and X4 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 LIFE Old and X4 Pharmaceuticals into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between LIFE Old and X4 Pharmaceuticals, you can compare the effects of market volatilities on LIFE Old and X4 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 LIFE Old with a short position of X4 Pharmaceuticals. Check out your portfolio center. Please also check ongoing floating volatility patterns of LIFE Old and X4 Pharmaceuticals.

Diversification Opportunities for LIFE Old and X4 Pharmaceuticals

0.19

Correlation Coefficient

LIFE Old  X4 Pharmaceuticals

Average diversification

The 3 months correlation between LIFE and XFOR is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding LIFE Old and X4 Pharmaceuticals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on X4 Pharmaceuticals and LIFE Old 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 LIFE Old are associated (or correlated) with X4 Pharmaceuticals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of X4 Pharmaceuticals has no effect on the direction of LIFE Old i.e., LIFE Old and X4 Pharmaceuticals go up and down completely randomly.

Pair Corralation between LIFE Old and X4 Pharmaceuticals

If you would invest  49.00  in X4 Pharmaceuticals on October 25, 2024 and sell it today you would lose (0.20) from holding X4 Pharmaceuticals or give up 0.41% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

LIFE Old  vs.  X4 Pharmaceuticals

LIFE Old

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days LIFE Old has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, LIFE Old is not utilizing all of its potentials. The recent stock price tumult, may contribute to shorter-term losses for the shareholders.

X4 Pharmaceuticals

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in X4 Pharmaceuticals are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Even with relatively unfluctuating basic indicators, X4 Pharmaceuticals reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with LIFE Old and X4 Pharmaceuticals

The main advantage of trading using opposite LIFE Old and X4 Pharmaceuticals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LIFE Old position performs unexpectedly, X4 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 X4 Pharmaceuticals will offset losses from the drop in X4 Pharmaceuticals' long position.

The idea behind LIFE Old and X4 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.

Check out your portfolio center.

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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.