Correlation Between Allena Pharmaceuticals and Airgain

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

Diversification Opportunities for Allena Pharmaceuticals and Airgain

0.0
  Correlation Coefficient

Pay attention - limited upside

The 3 months correlation between Allena and Airgain is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Allena Pharmaceuticals and Airgain in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Airgain and Allena 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 Allena Pharmaceuticals are associated (or correlated) with Airgain. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Airgain has no effect on the direction of Allena Pharmaceuticals i.e., Allena Pharmaceuticals and Airgain go up and down completely randomly.

Pair Corralation between Allena Pharmaceuticals and Airgain

If you would invest (100.00)  in Airgain on May 17, 2022 and sell it today you would earn a total of  100.00  from holding Airgain or generate -100.0% return on investment over 90 days.
Time Period3 Months [change]
DirectionFlat 
StrengthInsignificant
Accuracy0.0%
ValuesDaily Returns

Allena Pharmaceuticals  vs.  Airgain

 Performance (%) 
       Timeline  
Allena Pharmaceuticals 
Allena Performance
4 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Allena Pharmaceuticals are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Allena Pharmaceuticals sustained solid returns over the last few months and may actually be approaching a breakup point.

Allena Price Channel

Airgain 
Airgain Performance
0 of 100
Over the last 90 days Airgain has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, Airgain is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Allena Pharmaceuticals and Airgain Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Allena Pharmaceuticals and Airgain

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

Allena Pharmaceuticals

Pair trading matchups for Allena Pharmaceuticals

The idea behind Allena Pharmaceuticals and Airgain 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.

Airgain

Pair trading matchups for Airgain

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The effect of pair diversification on risk is to reduce it, but we should note this doesn't apply to all risk types. When we trade pairs against Airgain as a counterpart, there is always some inherent risk that will never be diversified away no matter what. This volatility limits the effect of tactical diversification using pair trading. Airgain's systematic risk is the inherent uncertainty of the entire market, and therefore cannot be mitigated even by pair-trading it against the equity that is not highly correlated to it. On the other hand, Airgain's unsystematic risk describes the types of risk that we can protect against, at least to some degree, by selecting a matching pair that is not perfectly correlated to Airgain.
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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.

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