Correlation Between Alpha Tau and Adagene

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Can any of the company-specific risk be diversified away by investing in both Alpha Tau and Adagene 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 Alpha Tau and Adagene into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Alpha Tau Medical and Adagene, you can compare the effects of market volatilities on Alpha Tau and Adagene 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 Alpha Tau with a short position of Adagene. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alpha Tau and Adagene.

Diversification Opportunities for Alpha Tau and Adagene

-0.78
  Correlation Coefficient

Pay attention - limited upside

The 3 months correlation between Alpha and Adagene is -0.78. Overlapping area represents the amount of risk that can be diversified away by holding Alpha Tau Medical and Adagene in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Adagene and Alpha Tau 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 Alpha Tau Medical are associated (or correlated) with Adagene. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Adagene has no effect on the direction of Alpha Tau i.e., Alpha Tau and Adagene go up and down completely randomly.

Pair Corralation between Alpha Tau and Adagene

Given the investment horizon of 90 days Alpha Tau Medical is expected to generate 0.58 times more return on investment than Adagene. However, Alpha Tau Medical is 1.71 times less risky than Adagene. It trades about 0.15 of its potential returns per unit of risk. Adagene is currently generating about -0.05 per unit of risk. If you would invest  234.00  in Alpha Tau Medical on November 2, 2024 and sell it today you would earn a total of  146.00  from holding Alpha Tau Medical or generate 62.39% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthWeak
Accuracy100.0%
ValuesDaily Returns

Alpha Tau Medical  vs.  Adagene

 Performance 
       Timeline  
Alpha Tau Medical 

Risk-Adjusted Performance

19 of 100

 
Weak
 
Strong
Solid
Compared to the overall equity markets, risk-adjusted returns on investments in Alpha Tau Medical are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, Alpha Tau unveiled solid returns over the last few months and may actually be approaching a breakup point.
Adagene 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Adagene has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unsteady performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in March 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Alpha Tau and Adagene Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Alpha Tau and Adagene

The main advantage of trading using opposite Alpha Tau and Adagene positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alpha Tau position performs unexpectedly, Adagene 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 Adagene will offset losses from the drop in Adagene's long position.
The idea behind Alpha Tau Medical and Adagene 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.

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