Correlation Between Pulmatrix and Axcella Health

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

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

Diversification Opportunities for Pulmatrix and Axcella Health

-0.68

Correlation Coefficient

Pulmatrix  Axcella Health

Excellent diversification

The 3 months correlation between Pulmatrix and Axcella is -0.68. Overlapping area represents the amount of risk that can be diversified away by holding Pulmatrix and Axcella Health in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Axcella Health and Pulmatrix 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 Pulmatrix are associated (or correlated) with Axcella Health. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Axcella Health has no effect on the direction of Pulmatrix i.e., Pulmatrix and Axcella Health go up and down completely randomly.

Pair Corralation between Pulmatrix and Axcella Health

If you would invest  208.00  in Pulmatrix on September 1, 2024 and sell it today you would earn a total of  456.00  from holding Pulmatrix or generate 219.23% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	1.59%
Values	Daily Returns

Pulmatrix  vs.  Axcella Health

Pulmatrix

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Pulmatrix are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of very weak essential indicators, Pulmatrix displayed solid returns over the last few months and may actually be approaching a breakup point.

Axcella Health

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Axcella Health has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong essential indicators, Axcella Health is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Pulmatrix and Axcella Health

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

The idea behind Pulmatrix and Axcella Health 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.