Correlation Between SSGA Active and Amylyx Pharmaceuticals

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

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

Diversification Opportunities for SSGA Active and Amylyx Pharmaceuticals

-0.55

Correlation Coefficient

SSGA Active  Amylyx Pharmaceuticals

Excellent diversification

The 3 months correlation between SSGA and Amylyx is -0.55. Overlapping area represents the amount of risk that can be diversified away by holding SSGA Active Trust and Amylyx Pharmaceuticals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Amylyx Pharmaceuticals and SSGA Active 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 SSGA Active Trust 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 SSGA Active i.e., SSGA Active and Amylyx Pharmaceuticals go up and down completely randomly.

Pair Corralation between SSGA Active and Amylyx Pharmaceuticals

Given the investment horizon of 90 days SSGA Active Trust is expected to generate 0.04 times more return on investment than Amylyx Pharmaceuticals. However, SSGA Active Trust is 22.47 times less risky than Amylyx Pharmaceuticals. It trades about -0.06 of its potential returns per unit of risk. Amylyx Pharmaceuticals is currently generating about -0.22 per unit of risk. If you would invest  2,968  in SSGA Active Trust on September 20, 2024 and sell it today you would lose (7.00) from holding SSGA Active Trust or give up 0.24% of portfolio value over 90 days.

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

SSGA Active Trust  vs.  Amylyx Pharmaceuticals

SSGA Active Trust

Risk-Adjusted Performance

0 of 100

Very Weak

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

Amylyx Pharmaceuticals

Risk-Adjusted Performance

9 of 100

OK

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

Pair Trading with SSGA Active and Amylyx Pharmaceuticals

The main advantage of trading using opposite SSGA Active and Amylyx Pharmaceuticals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SSGA Active 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 SSGA Active Trust 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.