Correlation Between Alpha Tau and Revelation Biosciences

Can any of the company-specific risk be diversified away by investing in both Alpha Tau and Revelation Biosciences 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 Revelation Biosciences 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 Revelation Biosciences, you can compare the effects of market volatilities on Alpha Tau and Revelation Biosciences 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 Revelation Biosciences. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alpha Tau and Revelation Biosciences.

Diversification Opportunities for Alpha Tau and Revelation Biosciences

-0.31

Correlation Coefficient

Alpha Tau  Revelation Biosciences

Very good diversification

The 3 months correlation between Alpha and Revelation is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding Alpha Tau Medical and Revelation Biosciences in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Revelation Biosciences 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 Revelation Biosciences. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Revelation Biosciences has no effect on the direction of Alpha Tau i.e., Alpha Tau and Revelation Biosciences go up and down completely randomly.

Pair Corralation between Alpha Tau and Revelation Biosciences

Assuming the 90 days horizon Alpha Tau Medical is expected to generate 1.53 times more return on investment than Revelation Biosciences. However, Alpha Tau is 1.53 times more volatile than Revelation Biosciences. It trades about 0.11 of its potential returns per unit of risk. Revelation Biosciences is currently generating about -0.09 per unit of risk. If you would invest  20.00  in Alpha Tau Medical on September 13, 2024 and sell it today you would earn a total of  5.00  from holding Alpha Tau Medical or generate 25.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	66.67%
Values	Daily Returns

Alpha Tau Medical  vs.  Revelation Biosciences

Alpha Tau Medical

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Alpha Tau Medical are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of fairly uncertain basic indicators, Alpha Tau showed solid returns over the last few months and may actually be approaching a breakup point.

Revelation Biosciences

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Revelation Biosciences has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Alpha Tau and Revelation Biosciences

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

The idea behind Alpha Tau Medical and Revelation Biosciences 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.