Correlation Between ATyr Pharma and Scpharmaceuticals

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

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

Diversification Opportunities for ATyr Pharma and Scpharmaceuticals

0.29

Correlation Coefficient

ATyr Pharma  Scpharmaceuticals

Modest diversification

The 3 months correlation between ATyr and Scpharmaceuticals is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding ATyr Pharma and Scpharmaceuticals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Scpharmaceuticals and ATyr Pharma 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 ATyr Pharma are associated (or correlated) with Scpharmaceuticals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Scpharmaceuticals has no effect on the direction of ATyr Pharma i.e., ATyr Pharma and Scpharmaceuticals go up and down completely randomly.

Pair Corralation between ATyr Pharma and Scpharmaceuticals

Given the investment horizon of 90 days ATyr Pharma is expected to under-perform the Scpharmaceuticals. In addition to that, ATyr Pharma is 1.86 times more volatile than Scpharmaceuticals. It trades about -0.05 of its total potential returns per unit of risk. Scpharmaceuticals is currently generating about -0.06 per unit of volatility. If you would invest  1,127  in Scpharmaceuticals on August 31, 2024 and sell it today you would lose (753.00) from holding Scpharmaceuticals or give up 66.81% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	69.8%
Values	Daily Returns

ATyr Pharma  vs.  Scpharmaceuticals

ATyr Pharma

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ATyr Pharma has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, ATyr Pharma is not utilizing all of its potentials. The recent stock price tumult, may contribute to shorter-term losses for the shareholders.

Scpharmaceuticals

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Scpharmaceuticals has generated negative risk-adjusted returns adding no value to investors with long positions. Despite uncertain performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in December 2024. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Pair Trading with ATyr Pharma and Scpharmaceuticals

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

The idea behind ATyr Pharma and Scpharmaceuticals 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.