Correlation Between Foghorn Therapeutics and ATyr Pharma

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

Diversification Opportunities for Foghorn Therapeutics and ATyr Pharma

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  Correlation Coefficient

Pay attention - limited upside

The 3 months correlation between Foghorn and ATyr is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Foghorn Therapeutics and ATyr Pharma in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ATyr Pharma and Foghorn Therapeutics 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 Foghorn Therapeutics are associated (or correlated) with ATyr Pharma. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ATyr Pharma has no effect on the direction of Foghorn Therapeutics i.e., Foghorn Therapeutics and ATyr Pharma go up and down completely randomly.

Pair Corralation between Foghorn Therapeutics and ATyr Pharma

If you would invest  764.00  in Foghorn Therapeutics on August 25, 2024 and sell it today you would earn a total of  20.00  from holding Foghorn Therapeutics or generate 2.62% return on investment over 90 days.
Time Period3 Months [change]
DirectionFlat 
StrengthInsignificant
Accuracy0.0%
ValuesDaily Returns

Foghorn Therapeutics  vs.  ATyr Pharma

 Performance 
       Timeline  
Foghorn Therapeutics 

Risk-Adjusted Performance

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Over the last 90 days Foghorn Therapeutics has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, Foghorn Therapeutics is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.
ATyr Pharma 

Risk-Adjusted Performance

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Weak
 
Strong
Very Weak
Over the last 90 days ATyr Pharma has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, ATyr Pharma is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Foghorn Therapeutics and ATyr Pharma Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Foghorn Therapeutics and ATyr Pharma

The main advantage of trading using opposite Foghorn Therapeutics and ATyr Pharma positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Foghorn Therapeutics position performs unexpectedly, ATyr Pharma 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 ATyr Pharma will offset losses from the drop in ATyr Pharma's long position.
The idea behind Foghorn Therapeutics and ATyr Pharma 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.
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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 Stocks Directory module to find actively traded stocks across global markets.

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