Correlation Between Cytokinetics and Alector
Can any of the company-specific risk be diversified away by investing in both Cytokinetics and Alector 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 Cytokinetics and Alector into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cytokinetics and Alector, you can compare the effects of market volatilities on Cytokinetics and Alector 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 Cytokinetics with a short position of Alector. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cytokinetics and Alector.
Diversification Opportunities for Cytokinetics and Alector
0.6 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Cytokinetics and Alector is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Cytokinetics and Alector in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alector and Cytokinetics 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 Cytokinetics are associated (or correlated) with Alector. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alector has no effect on the direction of Cytokinetics i.e., Cytokinetics and Alector go up and down completely randomly.
Pair Corralation between Cytokinetics and Alector
Given the investment horizon of 90 days Cytokinetics is expected to generate 0.53 times more return on investment than Alector. However, Cytokinetics is 1.9 times less risky than Alector. It trades about -0.04 of its potential returns per unit of risk. Alector is currently generating about -0.16 per unit of risk. If you would invest 5,226 in Cytokinetics on August 28, 2024 and sell it today you would lose (201.00) from holding Cytokinetics or give up 3.85% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Cytokinetics vs. Alector
Performance |
| Timeline |
| Cytokinetics |
| Alector |
Cytokinetics and Alector Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cytokinetics and Alector
The main advantage of trading using opposite Cytokinetics and Alector positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cytokinetics position performs unexpectedly, Alector 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 Alector will offset losses from the drop in Alector's long position.| Cytokinetics vs. Eliem Therapeutics | Cytokinetics vs. HCW Biologics | Cytokinetics vs. Scpharmaceuticals | Cytokinetics vs. Milestone Pharmaceuticals |
| Alector vs. Eliem Therapeutics | Alector vs. HCW Biologics | Alector vs. Scpharmaceuticals | Alector 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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