Correlation Between Seelos Therapeutics and Algernon Pharmaceuticals

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Can any of the company-specific risk be diversified away by investing in both Seelos Therapeutics and Algernon 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 Seelos Therapeutics and Algernon Pharmaceuticals into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Seelos Therapeutics and Algernon Pharmaceuticals, you can compare the effects of market volatilities on Seelos Therapeutics and Algernon 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 Seelos Therapeutics with a short position of Algernon Pharmaceuticals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Seelos Therapeutics and Algernon Pharmaceuticals.

Diversification Opportunities for Seelos Therapeutics and Algernon Pharmaceuticals

SeelosAlgernonDiversified AwaySeelosAlgernonDiversified Away100%
0.59
  Correlation Coefficient

Very weak diversification

The 3 months correlation between Seelos and Algernon is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding Seelos Therapeutics and Algernon Pharmaceuticals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Algernon Pharmaceuticals and Seelos Therapeutics 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 Seelos Therapeutics are associated (or correlated) with Algernon Pharmaceuticals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Algernon Pharmaceuticals has no effect on the direction of Seelos Therapeutics i.e., Seelos Therapeutics and Algernon Pharmaceuticals go up and down completely randomly.

Pair Corralation between Seelos Therapeutics and Algernon Pharmaceuticals

Given the investment horizon of 90 days Seelos Therapeutics is expected to under-perform the Algernon Pharmaceuticals. In addition to that, Seelos Therapeutics is 1.11 times more volatile than Algernon Pharmaceuticals. It trades about -0.35 of its total potential returns per unit of risk. Algernon Pharmaceuticals is currently generating about 0.06 per unit of volatility. If you would invest  5.49  in Algernon Pharmaceuticals on October 15, 2024 and sell it today you would earn a total of  0.51  from holding Algernon Pharmaceuticals or generate 9.29% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthWeak
Accuracy41.27%
ValuesDaily Returns

Seelos Therapeutics  vs.  Algernon Pharmaceuticals

 Performance 
JavaScript chart by amCharts 3.21.15OctNovDec -80-60-40-200
JavaScript chart by amCharts 3.21.15SEEL AGNPF
       Timeline  
Seelos Therapeutics 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Seelos Therapeutics has generated negative risk-adjusted returns adding no value to investors with long positions. Despite inconsistent performance in the last few months, the Stock's technical and fundamental indicators remain quite persistent which may send shares a bit higher in February 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.
Algernon Pharmaceuticals 

Risk-Adjusted Performance

4 of 100

 
Weak
 
Strong
Modest
Compared to the overall equity markets, risk-adjusted returns on investments in Algernon Pharmaceuticals are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Algernon Pharmaceuticals reported solid returns over the last few months and may actually be approaching a breakup point.
JavaScript chart by amCharts 3.21.15NovDecJanDecJan0.040.0450.050.0550.060.0650.07

Seelos Therapeutics and Algernon Pharmaceuticals Volatility Contrast

   Predicted Return Density   
JavaScript chart by amCharts 3.21.15-23.6-17.68-11.75-5.830.04.59.0813.6518.23 0.00250.00300.00350.0040
JavaScript chart by amCharts 3.21.15SEEL AGNPF
       Returns  

Pair Trading with Seelos Therapeutics and Algernon Pharmaceuticals

The main advantage of trading using opposite Seelos Therapeutics and Algernon Pharmaceuticals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Seelos Therapeutics position performs unexpectedly, Algernon 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 Algernon Pharmaceuticals will offset losses from the drop in Algernon Pharmaceuticals' long position.
The idea behind Seelos Therapeutics and Algernon 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.

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