Correlation Between PolyPid and AN2 Therapeutics
Can any of the company-specific risk be diversified away by investing in both PolyPid and AN2 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 PolyPid and AN2 Therapeutics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between PolyPid and AN2 Therapeutics, you can compare the effects of market volatilities on PolyPid and AN2 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 PolyPid with a short position of AN2 Therapeutics. Check out your portfolio center. Please also check ongoing floating volatility patterns of PolyPid and AN2 Therapeutics.
Diversification Opportunities for PolyPid and AN2 Therapeutics
0.01 | Correlation Coefficient |
Significant diversification
The 3 months correlation between PolyPid and AN2 is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding PolyPid and AN2 Therapeutics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AN2 Therapeutics and PolyPid 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 PolyPid are associated (or correlated) with AN2 Therapeutics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AN2 Therapeutics has no effect on the direction of PolyPid i.e., PolyPid and AN2 Therapeutics go up and down completely randomly.
Pair Corralation between PolyPid and AN2 Therapeutics
Given the investment horizon of 90 days PolyPid is expected to under-perform the AN2 Therapeutics. But the stock apears to be less risky and, when comparing its historical volatility, PolyPid is 1.2 times less risky than AN2 Therapeutics. The stock trades about -0.03 of its potential returns per unit of risk. The AN2 Therapeutics is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest 976.00 in AN2 Therapeutics on December 11, 2024 and sell it today you would lose (841.00) from holding AN2 Therapeutics or give up 86.17% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
PolyPid vs. AN2 Therapeutics
Performance |
| Timeline |
| PolyPid |
| AN2 Therapeutics |
PolyPid and AN2 Therapeutics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PolyPid and AN2 Therapeutics
The main advantage of trading using opposite PolyPid and AN2 Therapeutics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PolyPid position performs unexpectedly, AN2 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 AN2 Therapeutics will offset losses from the drop in AN2 Therapeutics' long position.The idea behind PolyPid and AN2 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.| AN2 Therapeutics vs. Aerovate Therapeutics | ||
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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 Global Correlations module to find global opportunities by holding instruments from different markets.
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