Correlation Between Allogene Therapeutics and G1 Therapeutics

Can any of the company-specific risk be diversified away by investing in both Allogene Therapeutics and G1 Therapeutics 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 Allogene Therapeutics and G1 Therapeutics into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Allogene Therapeutics and G1 Therapeutics, you can compare the effects of market volatilities on Allogene Therapeutics and G1 Therapeutics 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 Allogene Therapeutics with a short position of G1 Therapeutics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Allogene Therapeutics and G1 Therapeutics.

Diversification Opportunities for Allogene Therapeutics and G1 Therapeutics

-0.18

Correlation Coefficient

Allogene Therapeutics  G1 Therapeutics

Good diversification

The 3 months correlation between Allogene and GTHX is -0.18. Overlapping area represents the amount of risk that can be diversified away by holding Allogene Therapeutics and G1 Therapeutics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on G1 Therapeutics and Allogene 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 Allogene Therapeutics are associated (or correlated) with G1 Therapeutics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of G1 Therapeutics has no effect on the direction of Allogene Therapeutics i.e., Allogene Therapeutics and G1 Therapeutics go up and down completely randomly.

Pair Corralation between Allogene Therapeutics and G1 Therapeutics

Given the investment horizon of 90 days Allogene Therapeutics is expected to generate 50.26 times more return on investment than G1 Therapeutics. However, Allogene Therapeutics is 50.26 times more volatile than G1 Therapeutics. It trades about 0.02 of its potential returns per unit of risk. G1 Therapeutics is currently generating about 0.24 per unit of risk. If you would invest  258.00  in Allogene Therapeutics on September 4, 2024 and sell it today you would lose (3.00) from holding Allogene Therapeutics or give up 1.16% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	17.19%
Values	Daily Returns

Allogene Therapeutics  vs.  G1 Therapeutics

Allogene Therapeutics

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Allogene Therapeutics are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of very weak essential indicators, Allogene Therapeutics may actually be approaching a critical reversion point that can send shares even higher in January 2025.

G1 Therapeutics

Risk-Adjusted Performance

0 of 100

Solid

Over the last 90 days G1 Therapeutics has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong technical indicators, G1 Therapeutics is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Allogene Therapeutics and G1 Therapeutics

The main advantage of trading using opposite Allogene Therapeutics and G1 Therapeutics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Allogene Therapeutics position performs unexpectedly, G1 Therapeutics 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 G1 Therapeutics will offset losses from the drop in G1 Therapeutics' long position.

The idea behind Allogene Therapeutics and G1 Therapeutics 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.