Correlation Between Aileron Therapeutics and Palatin Technologies
Can any of the company-specific risk be diversified away by investing in both Aileron Therapeutics and Palatin Technologies 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 Aileron Therapeutics and Palatin Technologies into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Aileron Therapeutics and Palatin Technologies, you can compare the effects of market volatilities on Aileron Therapeutics and Palatin Technologies 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 Aileron Therapeutics with a short position of Palatin Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aileron Therapeutics and Palatin Technologies.
Diversification Opportunities for Aileron Therapeutics and Palatin Technologies
0.33 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Aileron and Palatin is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding Aileron Therapeutics and Palatin Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Palatin Technologies and Aileron Therapeutics 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 Aileron Therapeutics are associated (or correlated) with Palatin Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Palatin Technologies has no effect on the direction of Aileron Therapeutics i.e., Aileron Therapeutics and Palatin Technologies go up and down completely randomly.
Pair Corralation between Aileron Therapeutics and Palatin Technologies
Given the investment horizon of 90 days Aileron Therapeutics is expected to generate 20.96 times less return on investment than Palatin Technologies. But when comparing it to its historical volatility, Aileron Therapeutics is 1.18 times less risky than Palatin Technologies. It trades about 0.02 of its potential returns per unit of risk. Palatin Technologies is currently generating about 0.3 of returns per unit of risk over similar time horizon. If you would invest 91.00 in Palatin Technologies on October 9, 2024 and sell it today you would earn a total of 41.00 from holding Palatin Technologies or generate 45.05% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Aileron Therapeutics vs. Palatin Technologies
Performance |
| Timeline |
| Aileron Therapeutics |
| Palatin Technologies |
Aileron Therapeutics and Palatin Technologies Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Aileron Therapeutics and Palatin Technologies
The main advantage of trading using opposite Aileron Therapeutics and Palatin Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aileron Therapeutics position performs unexpectedly, Palatin Technologies 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 Palatin Technologies will offset losses from the drop in Palatin Technologies' long position.| Aileron Therapeutics vs. Bio Path Holdings | Aileron Therapeutics vs. Benitec Biopharma Ltd | Aileron Therapeutics vs. Artelo Biosciences | Aileron Therapeutics vs. Curis Inc |
| Palatin Technologies vs. Fortress Biotech | Palatin Technologies vs. Checkpoint Therapeutics | Palatin Technologies vs. Avenue Therapeutics | Palatin Technologies vs. Aileron 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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