Correlation Between Recursion Pharmaceuticals and Atlantic Sapphire

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

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

Diversification Opportunities for Recursion Pharmaceuticals and Atlantic Sapphire

-0.1

Correlation Coefficient

Recursion Pharmaceuticals  Atlantic Sapphire

Good diversification

The 3 months correlation between Recursion and Atlantic is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding Recursion Pharmaceuticals and Atlantic Sapphire ASA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Atlantic Sapphire ASA and Recursion Pharmaceuticals 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 Recursion Pharmaceuticals are associated (or correlated) with Atlantic Sapphire. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Atlantic Sapphire ASA has no effect on the direction of Recursion Pharmaceuticals i.e., Recursion Pharmaceuticals and Atlantic Sapphire go up and down completely randomly.

Pair Corralation between Recursion Pharmaceuticals and Atlantic Sapphire

Given the investment horizon of 90 days Recursion Pharmaceuticals is expected to generate 1.85 times less return on investment than Atlantic Sapphire. But when comparing it to its historical volatility, Recursion Pharmaceuticals is 4.13 times less risky than Atlantic Sapphire. It trades about 0.03 of its potential returns per unit of risk. Atlantic Sapphire ASA is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  2.98  in Atlantic Sapphire ASA on September 18, 2024 and sell it today you would lose (2.06) from holding Atlantic Sapphire ASA or give up 69.13% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.44%
Values	Daily Returns

Recursion Pharmaceuticals  vs.  Atlantic Sapphire ASA

Recursion Pharmaceuticals

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Recursion Pharmaceuticals are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of fairly inconsistent basic indicators, Recursion Pharmaceuticals may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Atlantic Sapphire ASA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Atlantic Sapphire ASA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly weak basic indicators, Atlantic Sapphire reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Recursion Pharmaceuticals and Atlantic Sapphire

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

The idea behind Recursion Pharmaceuticals and Atlantic Sapphire ASA 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.