Correlation Between Alpha Tau and Citius Pharmaceuticals

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

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

Diversification Opportunities for Alpha Tau and Citius Pharmaceuticals

-0.46

Correlation Coefficient

Alpha Tau  Citius Pharmaceuticals

Very good diversification

The 3 months correlation between Alpha and Citius is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding Alpha Tau Medical and Citius Pharmaceuticals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Citius Pharmaceuticals and Alpha Tau 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 Alpha Tau Medical are associated (or correlated) with Citius Pharmaceuticals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Citius Pharmaceuticals has no effect on the direction of Alpha Tau i.e., Alpha Tau and Citius Pharmaceuticals go up and down completely randomly.

Pair Corralation between Alpha Tau and Citius Pharmaceuticals

Given the investment horizon of 90 days Alpha Tau Medical is expected to generate 0.72 times more return on investment than Citius Pharmaceuticals. However, Alpha Tau Medical is 1.39 times less risky than Citius Pharmaceuticals. It trades about 0.02 of its potential returns per unit of risk. Citius Pharmaceuticals is currently generating about -0.05 per unit of risk. If you would invest  324.00  in Alpha Tau Medical on September 5, 2024 and sell it today you would lose (23.00) from holding Alpha Tau Medical or give up 7.1% of portfolio value over 90 days.

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

Alpha Tau Medical  vs.  Citius Pharmaceuticals

Alpha Tau Medical

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Alpha Tau Medical are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively conflicting basic indicators, Alpha Tau unveiled solid returns over the last few months and may actually be approaching a breakup point.

Citius Pharmaceuticals

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Citius Pharmaceuticals has generated negative risk-adjusted returns adding no value to investors with long positions. Even with weak performance in the last few months, the Stock's basic indicators remain relatively invariable which may send shares a bit higher in January 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Pair Trading with Alpha Tau and Citius Pharmaceuticals

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

The idea behind Alpha Tau Medical and Citius Pharmaceuticals 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.