Correlation Between Alpha Teknova and Phibro Animal

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

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

Diversification Opportunities for Alpha Teknova and Phibro Animal

0.68

Correlation Coefficient

Alpha Teknova  Phibro Animal

Poor diversification

The 3 months correlation between Alpha and Phibro is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Alpha Teknova and Phibro Animal Health in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Phibro Animal Health and Alpha Teknova 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 Teknova are associated (or correlated) with Phibro Animal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Phibro Animal Health has no effect on the direction of Alpha Teknova i.e., Alpha Teknova and Phibro Animal go up and down completely randomly.

Pair Corralation between Alpha Teknova and Phibro Animal

Given the investment horizon of 90 days Alpha Teknova is expected to generate 3.01 times more return on investment than Phibro Animal. However, Alpha Teknova is 3.01 times more volatile than Phibro Animal Health. It trades about 0.16 of its potential returns per unit of risk. Phibro Animal Health is currently generating about 0.1 per unit of risk. If you would invest  456.00  in Alpha Teknova on September 12, 2024 and sell it today you would earn a total of  320.00  from holding Alpha Teknova or generate 70.18% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

Alpha Teknova  vs.  Phibro Animal Health

Alpha Teknova

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Alpha Teknova are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of very conflicting basic indicators, Alpha Teknova displayed solid returns over the last few months and may actually be approaching a breakup point.

Phibro Animal Health

Risk-Adjusted Performance

8 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Phibro Animal Health are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of rather conflicting technical indicators, Phibro Animal exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Alpha Teknova and Phibro Animal

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

The idea behind Alpha Teknova and Phibro Animal Health 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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.