Correlation Between Phathom Pharmaceuticals and Arcellx

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

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

Diversification Opportunities for Phathom Pharmaceuticals and Arcellx

-0.43

Correlation Coefficient

Phathom Pharmaceuticals  Arcellx

Very good diversification

The 3 months correlation between Phathom and Arcellx is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding Phathom Pharmaceuticals and Arcellx in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Arcellx and Phathom Pharmaceuticals 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 Phathom Pharmaceuticals are associated (or correlated) with Arcellx. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Arcellx has no effect on the direction of Phathom Pharmaceuticals i.e., Phathom Pharmaceuticals and Arcellx go up and down completely randomly.

Pair Corralation between Phathom Pharmaceuticals and Arcellx

Given the investment horizon of 90 days Phathom Pharmaceuticals is expected to under-perform the Arcellx. In addition to that, Phathom Pharmaceuticals is 1.76 times more volatile than Arcellx. It trades about -0.14 of its total potential returns per unit of risk. Arcellx is currently generating about 0.08 per unit of volatility. If you would invest  7,427  in Arcellx on September 9, 2024 and sell it today you would earn a total of  1,028  from holding Arcellx or generate 13.84% return on investment over 90 days.

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

Phathom Pharmaceuticals  vs.  Arcellx

Phathom Pharmaceuticals

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Phathom Pharmaceuticals has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Arcellx

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Arcellx are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak essential indicators, Arcellx showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Phathom Pharmaceuticals and Arcellx

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

The idea behind Phathom Pharmaceuticals and Arcellx 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 Transaction History module to view history of all your transactions and understand their impact on performance.