Correlation Between Armata Pharmaceuticals and Passage Bio
Can any of the company-specific risk be diversified away by investing in both Armata Pharmaceuticals and Passage Bio 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 Passage Bio into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Armata Pharmaceuticals and Passage Bio, you can compare the effects of market volatilities on Armata Pharmaceuticals and Passage Bio 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 Passage Bio. Check out your portfolio center. Please also check ongoing floating volatility patterns of Armata Pharmaceuticals and Passage Bio.
Diversification Opportunities for Armata Pharmaceuticals and Passage Bio
-0.01 | Correlation Coefficient |
Good diversification
The 3 months correlation between Armata and Passage is -0.01. Overlapping area represents the amount of risk that can be diversified away by holding Armata Pharmaceuticals and Passage Bio in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Passage Bio 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 Passage Bio. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Passage Bio has no effect on the direction of Armata Pharmaceuticals i.e., Armata Pharmaceuticals and Passage Bio go up and down completely randomly.
Pair Corralation between Armata Pharmaceuticals and Passage Bio
Given the investment horizon of 90 days Armata Pharmaceuticals is expected to generate 0.91 times more return on investment than Passage Bio. However, Armata Pharmaceuticals is 1.1 times less risky than Passage Bio. It trades about 0.04 of its potential returns per unit of risk. Passage Bio is currently generating about -0.49 per unit of risk. If you would invest 197.00 in Armata Pharmaceuticals on November 4, 2024 and sell it today you would earn a total of 3.00 from holding Armata Pharmaceuticals or generate 1.52% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Armata Pharmaceuticals vs. Passage Bio
Performance |
| Timeline |
| Armata Pharmaceuticals |
| Passage Bio |
Armata Pharmaceuticals and Passage Bio Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Armata Pharmaceuticals and Passage Bio
The main advantage of trading using opposite Armata Pharmaceuticals and Passage Bio positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Armata Pharmaceuticals position performs unexpectedly, Passage Bio 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 Passage Bio will offset losses from the drop in Passage Bio's long position.The idea behind Armata Pharmaceuticals and Passage Bio 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.| Passage Bio vs. Black Diamond Therapeutics | Passage Bio vs. Revolution Medicines | Passage Bio vs. Stoke Therapeutics | Passage Bio vs. Cabaletta Bio |
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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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