Correlation Between Freedom Day and Amylyx Pharmaceuticals

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

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

Diversification Opportunities for Freedom Day and Amylyx Pharmaceuticals

0.33

Correlation Coefficient

Freedom Day  Amylyx Pharmaceuticals

Weak diversification

The 3 months correlation between Freedom and Amylyx is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding Freedom Day Dividend and Amylyx Pharmaceuticals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Amylyx Pharmaceuticals and Freedom Day 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 Freedom Day Dividend 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 Freedom Day i.e., Freedom Day and Amylyx Pharmaceuticals go up and down completely randomly.

Pair Corralation between Freedom Day and Amylyx Pharmaceuticals

Given the investment horizon of 90 days Freedom Day Dividend is expected to generate 0.21 times more return on investment than Amylyx Pharmaceuticals. However, Freedom Day Dividend is 4.78 times less risky than Amylyx Pharmaceuticals. It trades about -0.31 of its potential returns per unit of risk. Amylyx Pharmaceuticals is currently generating about -0.26 per unit of risk. If you would invest  3,477  in Freedom Day Dividend on September 22, 2024 and sell it today you would lose (196.00) from holding Freedom Day Dividend or give up 5.64% of portfolio value over 90 days.

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

Freedom Day Dividend  vs.  Amylyx Pharmaceuticals

Freedom Day Dividend

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Freedom Day Dividend has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, Freedom Day is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

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 unfluctuating essential indicators, Amylyx Pharmaceuticals showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Freedom Day and Amylyx Pharmaceuticals

The main advantage of trading using opposite Freedom Day and Amylyx Pharmaceuticals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Freedom Day 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 Freedom Day Dividend 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 Transaction History module to view history of all your transactions and understand their impact on performance.