Correlation Between Soulbrain Holdings and ALTEOGEN

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

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

Diversification Opportunities for Soulbrain Holdings and ALTEOGEN

0.25

Correlation Coefficient

Soulbrain Holdings  ALTEOGEN

Modest diversification

The 3 months correlation between Soulbrain and ALTEOGEN is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding Soulbrain Holdings Co and ALTEOGEN in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ALTEOGEN and Soulbrain Holdings 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 Soulbrain Holdings Co are associated (or correlated) with ALTEOGEN. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ALTEOGEN has no effect on the direction of Soulbrain Holdings i.e., Soulbrain Holdings and ALTEOGEN go up and down completely randomly.

Pair Corralation between Soulbrain Holdings and ALTEOGEN

Assuming the 90 days trading horizon Soulbrain Holdings Co is expected to under-perform the ALTEOGEN. But the stock apears to be less risky and, when comparing its historical volatility, Soulbrain Holdings Co is 1.5 times less risky than ALTEOGEN. The stock trades about -0.13 of its potential returns per unit of risk. The ALTEOGEN is currently generating about -0.03 of returns per unit of risk over similar time horizon. If you would invest  33,050,000  in ALTEOGEN on September 25, 2024 and sell it today you would lose (5,350,000) from holding ALTEOGEN or give up 16.19% of portfolio value over 90 days.

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

Soulbrain Holdings Co  vs.  ALTEOGEN

Soulbrain Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Soulbrain Holdings Co has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

ALTEOGEN

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ALTEOGEN has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with Soulbrain Holdings and ALTEOGEN

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

The idea behind Soulbrain Holdings Co and ALTEOGEN 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.