Correlation Between Aldeyra and Compugen
Can any of the company-specific risk be diversified away by investing in both Aldeyra and Compugen 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 Aldeyra and Compugen into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Aldeyra and Compugen, you can compare the effects of market volatilities on Aldeyra and Compugen 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 Aldeyra with a short position of Compugen. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aldeyra and Compugen.
Diversification Opportunities for Aldeyra and Compugen
Poor diversification
The 3 months correlation between Aldeyra and Compugen is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Aldeyra and Compugen in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Compugen and Aldeyra 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 Aldeyra are associated (or correlated) with Compugen. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Compugen has no effect on the direction of Aldeyra i.e., Aldeyra and Compugen go up and down completely randomly.
Pair Corralation between Aldeyra and Compugen
Given the investment horizon of 90 days Aldeyra is expected to generate 2.01 times less return on investment than Compugen. But when comparing it to its historical volatility, Aldeyra is 1.51 times less risky than Compugen. It trades about 0.03 of its potential returns per unit of risk. Compugen is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 104.00 in Compugen on August 30, 2024 and sell it today you would earn a total of 57.00 from holding Compugen or generate 54.81% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Aldeyra vs. Compugen
Performance |
| Timeline |
| Aldeyra |
| Compugen |
Aldeyra and Compugen Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Aldeyra and Compugen
The main advantage of trading using opposite Aldeyra and Compugen positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aldeyra position performs unexpectedly, Compugen 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 Compugen will offset losses from the drop in Compugen's long position.| Aldeyra vs. Tarsus Pharmaceuticals | Aldeyra vs. Travere Therapeutics | Aldeyra vs. Eton Pharmaceuticals | Aldeyra vs. Viridian Therapeutics |
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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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