Correlation Between Zai Lab and Amylyx Pharmaceuticals
Can any of the company-specific risk be diversified away by investing in both Zai Lab and Amylyx Pharmaceuticals 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 Zai Lab and Amylyx Pharmaceuticals into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Zai Lab and Amylyx Pharmaceuticals, you can compare the effects of market volatilities on Zai Lab and Amylyx Pharmaceuticals 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 Zai Lab with a short position of Amylyx Pharmaceuticals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Zai Lab and Amylyx Pharmaceuticals.
Diversification Opportunities for Zai Lab and Amylyx Pharmaceuticals
0.9 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Zai and Amylyx is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Zai Lab and Amylyx Pharmaceuticals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Amylyx Pharmaceuticals and Zai Lab 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 Zai Lab are associated (or correlated) with Amylyx Pharmaceuticals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Amylyx Pharmaceuticals has no effect on the direction of Zai Lab i.e., Zai Lab and Amylyx Pharmaceuticals go up and down completely randomly.
Pair Corralation between Zai Lab and Amylyx Pharmaceuticals
Given the investment horizon of 90 days Zai Lab is expected to under-perform the Amylyx Pharmaceuticals. But the stock apears to be less risky and, when comparing its historical volatility, Zai Lab is 1.51 times less risky than Amylyx Pharmaceuticals. The stock trades about -0.15 of its potential returns per unit of risk. The Amylyx Pharmaceuticals is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 533.00 in Amylyx Pharmaceuticals on August 27, 2024 and sell it today you would earn a total of 33.00 from holding Amylyx Pharmaceuticals or generate 6.19% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Zai Lab vs. Amylyx Pharmaceuticals
Performance |
| Timeline |
| Zai Lab |
| Amylyx Pharmaceuticals |
Zai Lab and Amylyx Pharmaceuticals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Zai Lab and Amylyx Pharmaceuticals
The main advantage of trading using opposite Zai Lab and Amylyx Pharmaceuticals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Zai Lab position performs unexpectedly, Amylyx Pharmaceuticals 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 Amylyx Pharmaceuticals will offset losses from the drop in Amylyx Pharmaceuticals' long position.| Zai Lab vs. C4 Therapeutics | Zai Lab vs. Erasca Inc | Zai Lab vs. Cullinan Oncology LLC | Zai Lab vs. Legend Biotech Corp |
| Amylyx Pharmaceuticals vs. Terns Pharmaceuticals | Amylyx Pharmaceuticals vs. Acumen Pharmaceuticals | Amylyx Pharmaceuticals vs. Inozyme Pharma | Amylyx Pharmaceuticals vs. X4 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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