Correlation Between Awakn Life and Pulmatrix

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

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

Diversification Opportunities for Awakn Life and Pulmatrix

0.25

Correlation Coefficient

Awakn Life  Pulmatrix

Modest diversification

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

Pair Corralation between Awakn Life and Pulmatrix

Assuming the 90 days horizon Awakn Life is expected to generate 9.49 times less return on investment than Pulmatrix. But when comparing it to its historical volatility, Awakn Life Sciences is 1.26 times less risky than Pulmatrix. It trades about 0.02 of its potential returns per unit of risk. Pulmatrix is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest  212.00  in Pulmatrix on September 18, 2024 and sell it today you would earn a total of  363.00  from holding Pulmatrix or generate 171.23% return on investment over 90 days.

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

Awakn Life Sciences  vs.  Pulmatrix

Awakn Life Sciences

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Awakn Life Sciences are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Awakn Life reported solid returns over the last few months and may actually be approaching a breakup point.

Pulmatrix

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Pulmatrix are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of very uncertain essential indicators, Pulmatrix displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Awakn Life and Pulmatrix

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

The idea behind Awakn Life Sciences and Pulmatrix 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.