Correlation Between Armata Pharmaceuticals and HCW Biologics
Can any of the company-specific risk be diversified away by investing in both Armata Pharmaceuticals and HCW Biologics 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 Armata Pharmaceuticals and HCW Biologics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Armata Pharmaceuticals and HCW Biologics, you can compare the effects of market volatilities on Armata Pharmaceuticals and HCW Biologics 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 Armata Pharmaceuticals with a short position of HCW Biologics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Armata Pharmaceuticals and HCW Biologics.
Diversification Opportunities for Armata Pharmaceuticals and HCW Biologics
-0.59 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Armata and HCW is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding Armata Pharmaceuticals and HCW Biologics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HCW Biologics and Armata Pharmaceuticals 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 Armata Pharmaceuticals are associated (or correlated) with HCW Biologics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HCW Biologics has no effect on the direction of Armata Pharmaceuticals i.e., Armata Pharmaceuticals and HCW Biologics go up and down completely randomly.
Pair Corralation between Armata Pharmaceuticals and HCW Biologics
Given the investment horizon of 90 days Armata Pharmaceuticals is expected to generate 70.06 times less return on investment than HCW Biologics. But when comparing it to its historical volatility, Armata Pharmaceuticals is 10.8 times less risky than HCW Biologics. It trades about 0.02 of its potential returns per unit of risk. HCW Biologics is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest 45.00 in HCW Biologics on August 28, 2024 and sell it today you would earn a total of 11.00 from holding HCW Biologics or generate 24.44% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Armata Pharmaceuticals vs. HCW Biologics
Performance |
| Timeline |
| Armata Pharmaceuticals |
| HCW Biologics |
Armata Pharmaceuticals and HCW Biologics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Armata Pharmaceuticals and HCW Biologics
The main advantage of trading using opposite Armata Pharmaceuticals and HCW Biologics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Armata Pharmaceuticals position performs unexpectedly, HCW Biologics 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 HCW Biologics will offset losses from the drop in HCW Biologics' long position.The idea behind Armata Pharmaceuticals and HCW Biologics 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.| HCW Biologics vs. Eliem Therapeutics | HCW Biologics vs. Scpharmaceuticals | HCW Biologics vs. Milestone Pharmaceuticals | HCW Biologics vs. Seres 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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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