Correlation Between Armata Pharmaceuticals and Lineage Cell
Can any of the company-specific risk be diversified away by investing in both Armata Pharmaceuticals and Lineage Cell 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 Lineage Cell into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Armata Pharmaceuticals and Lineage Cell Therapeutics, you can compare the effects of market volatilities on Armata Pharmaceuticals and Lineage Cell 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 Lineage Cell. Check out your portfolio center. Please also check ongoing floating volatility patterns of Armata Pharmaceuticals and Lineage Cell.
Diversification Opportunities for Armata Pharmaceuticals and Lineage Cell
0.68 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Armata and Lineage is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Armata Pharmaceuticals and Lineage Cell Therapeutics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lineage Cell Therapeutics 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 Lineage Cell. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lineage Cell Therapeutics has no effect on the direction of Armata Pharmaceuticals i.e., Armata Pharmaceuticals and Lineage Cell go up and down completely randomly.
Pair Corralation between Armata Pharmaceuticals and Lineage Cell
Given the investment horizon of 90 days Armata Pharmaceuticals is expected to generate 6.8 times less return on investment than Lineage Cell. But when comparing it to its historical volatility, Armata Pharmaceuticals is 2.17 times less risky than Lineage Cell. It trades about 0.05 of its potential returns per unit of risk. Lineage Cell Therapeutics is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest 52.00 in Lineage Cell Therapeutics on November 3, 2024 and sell it today you would earn a total of 11.00 from holding Lineage Cell Therapeutics or generate 21.15% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Armata Pharmaceuticals vs. Lineage Cell Therapeutics
Performance |
| Timeline |
| Armata Pharmaceuticals |
| Lineage Cell Therapeutics |
Armata Pharmaceuticals and Lineage Cell Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Armata Pharmaceuticals and Lineage Cell
The main advantage of trading using opposite Armata Pharmaceuticals and Lineage Cell positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Armata Pharmaceuticals position performs unexpectedly, Lineage Cell 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 Lineage Cell will offset losses from the drop in Lineage Cell's long position.The idea behind Armata Pharmaceuticals and Lineage Cell Therapeutics 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.| Lineage Cell vs. MAIA Biotechnology | Lineage Cell vs. Armata Pharmaceuticals | Lineage Cell vs. Portage Biotech | Lineage Cell vs. Cadrenal Therapeutics, Common |
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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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