Correlation Between Caribou Biosciences and ATAI Life

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

Diversification Opportunities for Caribou Biosciences and ATAI Life

0.32
  Correlation Coefficient

Weak diversification

The 3 months correlation between Caribou and ATAI is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding Caribou Biosciences and ATAI Life Sciences in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ATAI Life Sciences and Caribou Biosciences 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 Caribou Biosciences are associated (or correlated) with ATAI Life. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ATAI Life Sciences has no effect on the direction of Caribou Biosciences i.e., Caribou Biosciences and ATAI Life go up and down completely randomly.

Pair Corralation between Caribou Biosciences and ATAI Life

Given the investment horizon of 90 days Caribou Biosciences is expected to under-perform the ATAI Life. But the stock apears to be less risky and, when comparing its historical volatility, Caribou Biosciences is 1.13 times less risky than ATAI Life. The stock trades about -0.02 of its potential returns per unit of risk. The ATAI Life Sciences is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  119.00  in ATAI Life Sciences on September 26, 2024 and sell it today you would earn a total of  4.00  from holding ATAI Life Sciences or generate 3.36% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Weak
Accuracy100.0%
ValuesDaily Returns

Caribou Biosciences  vs.  ATAI Life Sciences

 Performance 
       Timeline  
Caribou Biosciences 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Caribou Biosciences has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable fundamental drivers, Caribou Biosciences is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.
ATAI Life Sciences 

Risk-Adjusted Performance

2 of 100

 
Weak
 
Strong
Weak
Compared to the overall equity markets, risk-adjusted returns on investments in ATAI Life Sciences are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite fairly unsteady basic indicators, ATAI Life demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Caribou Biosciences and ATAI Life Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Caribou Biosciences and ATAI Life

The main advantage of trading using opposite Caribou Biosciences and ATAI Life positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Caribou Biosciences position performs unexpectedly, ATAI Life 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 ATAI Life will offset losses from the drop in ATAI Life's long position.
The idea behind Caribou Biosciences and ATAI Life Sciences 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.
Check out your portfolio center.
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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.

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