Correlation Between Annexon and Algorand

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

Diversification Opportunities for Annexon and Algorand

-0.05
  Correlation Coefficient

Good diversification

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

Pair Corralation between Annexon and Algorand

Given the investment horizon of 90 days Annexon is expected to generate 0.5 times more return on investment than Algorand. However, Annexon is 1.98 times less risky than Algorand. It trades about -0.05 of its potential returns per unit of risk. Algorand is currently generating about -0.08 per unit of risk. If you would invest  618.00  in Annexon on August 31, 2022 and sell it today you would lose (61.00)  from holding Annexon or give up 9.87% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy97.67%
ValuesDaily Returns

Annexon  vs.  Algorand

 Performance (%) 
       Timeline  
Annexon 
Annexon Performance
0 of 100
Over the last 90 days Annexon has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, Annexon is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Annexon Price Channel

Algorand 
Algorand Performance
0 of 100
Over the last 90 days Algorand has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong technical and fundamental indicators, Algorand is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Algorand Price Channel

Annexon and Algorand Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Annexon and Algorand

The main advantage of trading using opposite Annexon and Algorand positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Annexon position performs unexpectedly, Algorand 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 Algorand will offset losses from the drop in Algorand's long position.
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The idea behind Annexon and Algorand 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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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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.

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