Correlation Between Atara Biotherapeutics and ADMA Biologics

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

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

Diversification Opportunities for Atara Biotherapeutics and ADMA Biologics

0.39

Correlation Coefficient

Atara Biotherapeutics  ADMA Biologics

Weak diversification

The 3 months correlation between Atara and ADMA is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding Atara Biotherapeutics and ADMA Biologics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ADMA Biologics and Atara Biotherapeutics 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 Atara Biotherapeutics are associated (or correlated) with ADMA Biologics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ADMA Biologics has no effect on the direction of Atara Biotherapeutics i.e., Atara Biotherapeutics and ADMA Biologics go up and down completely randomly.

Pair Corralation between Atara Biotherapeutics and ADMA Biologics

Given the investment horizon of 90 days Atara Biotherapeutics is expected to generate 1.83 times more return on investment than ADMA Biologics. However, Atara Biotherapeutics is 1.83 times more volatile than ADMA Biologics. It trades about 0.03 of its potential returns per unit of risk. ADMA Biologics is currently generating about -0.33 per unit of risk. If you would invest  1,212  in Atara Biotherapeutics on September 25, 2024 and sell it today you would earn a total of  8.00  from holding Atara Biotherapeutics or generate 0.66% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	95.24%
Values	Daily Returns

Atara Biotherapeutics  vs.  ADMA Biologics

Atara Biotherapeutics

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Atara Biotherapeutics are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite somewhat unsteady basic indicators, Atara Biotherapeutics sustained solid returns over the last few months and may actually be approaching a breakup point.

ADMA Biologics

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Atara Biotherapeutics and ADMA Biologics

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

The idea behind Atara Biotherapeutics and ADMA Biologics 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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.