Correlation Between Amylyx Pharmaceuticals and Acumen Pharmaceuticals

Can any of the company-specific risk be diversified away by investing in both Amylyx Pharmaceuticals and Acumen 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 Amylyx Pharmaceuticals and Acumen Pharmaceuticals into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Amylyx Pharmaceuticals and Acumen Pharmaceuticals, you can compare the effects of market volatilities on Amylyx Pharmaceuticals and Acumen 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 Amylyx Pharmaceuticals with a short position of Acumen Pharmaceuticals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Amylyx Pharmaceuticals and Acumen Pharmaceuticals.

Diversification Opportunities for Amylyx Pharmaceuticals and Acumen Pharmaceuticals

-0.05

Correlation Coefficient

Amylyx Pharmaceuticals  Acumen Pharmaceuticals

Good diversification

The 3 months correlation between Amylyx and Acumen is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding Amylyx Pharmaceuticals and Acumen Pharmaceuticals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Acumen Pharmaceuticals and Amylyx Pharmaceuticals 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 Amylyx Pharmaceuticals are associated (or correlated) with Acumen Pharmaceuticals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Acumen Pharmaceuticals has no effect on the direction of Amylyx Pharmaceuticals i.e., Amylyx Pharmaceuticals and Acumen Pharmaceuticals go up and down completely randomly.

Pair Corralation between Amylyx Pharmaceuticals and Acumen Pharmaceuticals

Given the investment horizon of 90 days Amylyx Pharmaceuticals is expected to under-perform the Acumen Pharmaceuticals. In addition to that, Amylyx Pharmaceuticals is 1.41 times more volatile than Acumen Pharmaceuticals. It trades about -0.23 of its total potential returns per unit of risk. Acumen Pharmaceuticals is currently generating about -0.12 per unit of volatility. If you would invest  385.00  in Acumen Pharmaceuticals on February 5, 2024 and sell it today you would lose (36.00) from holding Acumen Pharmaceuticals or give up 9.35% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Amylyx Pharmaceuticals  vs.  Acumen Pharmaceuticals

Amylyx Pharmaceuticals

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Amylyx Pharmaceuticals has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Etf's essential indicators remain fairly strong which may send shares a bit higher in June 2024. The current disturbance may also be a sign of long term up-swing for the ETF investors.

Acumen Pharmaceuticals

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Acumen Pharmaceuticals are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, Acumen Pharmaceuticals unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Amylyx Pharmaceuticals and Acumen Pharmaceuticals

The main advantage of trading using opposite Amylyx Pharmaceuticals and Acumen Pharmaceuticals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Amylyx Pharmaceuticals position performs unexpectedly, Acumen 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 Acumen Pharmaceuticals will offset losses from the drop in Acumen Pharmaceuticals' long position.

The idea behind Amylyx Pharmaceuticals and Acumen Pharmaceuticals 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.