Correlation Between Applied Molecular and Armata Pharmaceuticals
Can any of the company-specific risk be diversified away by investing in both Applied Molecular and Armata Pharmaceuticals 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 Applied Molecular and Armata Pharmaceuticals into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Applied Molecular Transport and Armata Pharmaceuticals, you can compare the effects of market volatilities on Applied Molecular and Armata Pharmaceuticals 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 Applied Molecular with a short position of Armata Pharmaceuticals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Applied Molecular and Armata Pharmaceuticals.
Diversification Opportunities for Applied Molecular and Armata Pharmaceuticals
0.05 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Applied and Armata is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding Applied Molecular Transport and Armata Pharmaceuticals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Armata Pharmaceuticals and Applied Molecular 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 Applied Molecular Transport are associated (or correlated) with Armata Pharmaceuticals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Armata Pharmaceuticals has no effect on the direction of Applied Molecular i.e., Applied Molecular and Armata Pharmaceuticals go up and down completely randomly.
Pair Corralation between Applied Molecular and Armata Pharmaceuticals
Given the investment horizon of 90 days Applied Molecular is expected to generate 4.35 times less return on investment than Armata Pharmaceuticals. But when comparing it to its historical volatility, Applied Molecular Transport is 1.1 times less risky than Armata Pharmaceuticals. It trades about 0.01 of its potential returns per unit of risk. Armata Pharmaceuticals is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 145.00 in Armata Pharmaceuticals on September 2, 2024 and sell it today you would earn a total of 85.00 from holding Armata Pharmaceuticals or generate 58.62% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 8.06% |
| Values | Daily Returns |
Applied Molecular Transport vs. Armata Pharmaceuticals
Performance |
| Timeline |
| Applied Molecular |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Armata Pharmaceuticals |
Applied Molecular and Armata Pharmaceuticals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Applied Molecular and Armata Pharmaceuticals
The main advantage of trading using opposite Applied Molecular and Armata Pharmaceuticals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Applied Molecular position performs unexpectedly, Armata Pharmaceuticals 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 Armata Pharmaceuticals will offset losses from the drop in Armata Pharmaceuticals' long position.| Applied Molecular vs. Aileron Therapeutics | Applied Molecular vs. Bio Path Holdings | Applied Molecular vs. Benitec Biopharma Ltd | Applied Molecular vs. Aerovate 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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