Correlation Between ATyr Pharma and Galera Therapeutics

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

Diversification Opportunities for ATyr Pharma and Galera Therapeutics

0.22
  Correlation Coefficient

Modest diversification

The 3 months correlation between ATyr and Galera is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding ATyr Pharma and Galera Therapeutics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Galera Therapeutics and ATyr Pharma 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 ATyr Pharma are associated (or correlated) with Galera Therapeutics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Galera Therapeutics has no effect on the direction of ATyr Pharma i.e., ATyr Pharma and Galera Therapeutics go up and down completely randomly.

Pair Corralation between ATyr Pharma and Galera Therapeutics

Given the investment horizon of 90 days ATyr Pharma is expected to under-perform the Galera Therapeutics. In addition to that, ATyr Pharma is 1.2 times more volatile than Galera Therapeutics. It trades about -0.04 of its total potential returns per unit of risk. Galera Therapeutics is currently generating about 0.08 per unit of volatility. If you would invest  167.00  in Galera Therapeutics on August 26, 2024 and sell it today you would earn a total of  91.00  from holding Galera Therapeutics or generate 54.49% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Weak
Accuracy41.73%
ValuesDaily Returns

ATyr Pharma  vs.  Galera Therapeutics

 Performance 
       Timeline  
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 recent stock price tumult, may contribute to shorter-term losses for the shareholders.
Galera Therapeutics 

Risk-Adjusted Performance

0 of 100

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

ATyr Pharma and Galera Therapeutics Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with ATyr Pharma and Galera Therapeutics

The main advantage of trading using opposite ATyr Pharma and Galera Therapeutics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ATyr Pharma position performs unexpectedly, Galera Therapeutics 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 Galera Therapeutics will offset losses from the drop in Galera Therapeutics' long position.
The idea behind ATyr Pharma and Galera Therapeutics 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..

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