Correlation Between Athenex and Sohm
Can any of the company-specific risk be diversified away by investing in both Athenex and Sohm 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 Athenex and Sohm into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Athenex and Sohm Inc, you can compare the effects of market volatilities on Athenex and Sohm 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 Athenex with a short position of Sohm. Check out your portfolio center. Please also check ongoing floating volatility patterns of Athenex and Sohm.
Diversification Opportunities for Athenex and Sohm
Very weak diversification
The 3 months correlation between Athenex and Sohm is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding Athenex and Sohm Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sohm Inc and Athenex 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 Athenex are associated (or correlated) with Sohm. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sohm Inc has no effect on the direction of Athenex i.e., Athenex and Sohm go up and down completely randomly.
Pair Corralation between Athenex and Sohm
Given the investment horizon of 90 days Athenex is expected to under-perform the Sohm. In addition to that, Athenex is 1.82 times more volatile than Sohm Inc. It trades about -0.14 of its total potential returns per unit of risk. Sohm Inc is currently generating about -0.09 per unit of volatility. If you would invest 0.13 in Sohm Inc on August 25, 2024 and sell it today you would lose (0.05) from holding Sohm Inc or give up 38.46% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 28.93% |
| Values | Daily Returns |
Athenex vs. Sohm Inc
Performance |
| Timeline |
| Athenex |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Sohm Inc |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Athenex and Sohm Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Athenex and Sohm
The main advantage of trading using opposite Athenex and Sohm positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Athenex position performs unexpectedly, Sohm 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 Sohm will offset losses from the drop in Sohm's long position.The idea behind Athenex and Sohm Inc 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.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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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