Correlation Between BZDYF and Amylyx Pharmaceuticals

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

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

Diversification Opportunities for BZDYF and Amylyx Pharmaceuticals

0.56

Correlation Coefficient

BZDYF  Amylyx Pharmaceuticals

Very weak diversification

The 3 months correlation between BZDYF and Amylyx is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding BZDYF and Amylyx Pharmaceuticals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Amylyx Pharmaceuticals and BZDYF 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 BZDYF 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 BZDYF i.e., BZDYF and Amylyx Pharmaceuticals go up and down completely randomly.

Pair Corralation between BZDYF and Amylyx Pharmaceuticals

Assuming the 90 days horizon BZDYF is expected to generate 0.11 times more return on investment than Amylyx Pharmaceuticals. However, BZDYF is 9.39 times less risky than Amylyx Pharmaceuticals. It trades about 0.08 of its potential returns per unit of risk. Amylyx Pharmaceuticals is currently generating about -0.03 per unit of risk. If you would invest  2,701  in BZDYF on September 20, 2024 and sell it today you would earn a total of  536.00  from holding BZDYF or generate 19.84% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	79.8%
Values	Daily Returns

BZDYF  vs.  Amylyx Pharmaceuticals

BZDYF

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days BZDYF has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, BZDYF is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Amylyx Pharmaceuticals

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Amylyx Pharmaceuticals are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak essential indicators, Amylyx Pharmaceuticals showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with BZDYF and Amylyx Pharmaceuticals

The main advantage of trading using opposite BZDYF and Amylyx Pharmaceuticals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BZDYF 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.

The idea behind BZDYF and Amylyx 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.