Correlation Between Applied Therapeutics and X4 Pharmaceuticals
Can any of the company-specific risk be diversified away by investing in both Applied Therapeutics and X4 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 Therapeutics and X4 Pharmaceuticals into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Applied Therapeutics and X4 Pharmaceuticals, you can compare the effects of market volatilities on Applied Therapeutics and X4 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 Therapeutics with a short position of X4 Pharmaceuticals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Applied Therapeutics and X4 Pharmaceuticals.
Diversification Opportunities for Applied Therapeutics and X4 Pharmaceuticals
-0.64 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Applied and XFOR is -0.64. Overlapping area represents the amount of risk that can be diversified away by holding Applied Therapeutics and X4 Pharmaceuticals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on X4 Pharmaceuticals and Applied 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 Applied Therapeutics are associated (or correlated) with X4 Pharmaceuticals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of X4 Pharmaceuticals has no effect on the direction of Applied Therapeutics i.e., Applied Therapeutics and X4 Pharmaceuticals go up and down completely randomly.
Pair Corralation between Applied Therapeutics and X4 Pharmaceuticals
Given the investment horizon of 90 days Applied Therapeutics is expected to generate 1.1 times more return on investment than X4 Pharmaceuticals. However, Applied Therapeutics is 1.1 times more volatile than X4 Pharmaceuticals. It trades about 0.09 of its potential returns per unit of risk. X4 Pharmaceuticals is currently generating about -0.01 per unit of risk. If you would invest 335.00 in Applied Therapeutics on August 25, 2024 and sell it today you would earn a total of 628.00 from holding Applied Therapeutics or generate 187.46% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Applied Therapeutics vs. X4 Pharmaceuticals
Performance |
| Timeline |
| Applied Therapeutics |
| X4 Pharmaceuticals |
Applied Therapeutics and X4 Pharmaceuticals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Applied Therapeutics and X4 Pharmaceuticals
The main advantage of trading using opposite Applied Therapeutics and X4 Pharmaceuticals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Applied Therapeutics position performs unexpectedly, X4 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 X4 Pharmaceuticals will offset losses from the drop in X4 Pharmaceuticals' long position.| Applied Therapeutics vs. X4 Pharmaceuticals | Applied Therapeutics vs. Terns Pharmaceuticals | Applied Therapeutics vs. Day One Biopharmaceuticals | Applied Therapeutics vs. Hookipa Pharma |
| X4 Pharmaceuticals vs. Eliem Therapeutics | X4 Pharmaceuticals vs. HCW Biologics | X4 Pharmaceuticals vs. Scpharmaceuticals | X4 Pharmaceuticals vs. Milestone Pharmaceuticals |
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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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