Correlation Between Intel and Allena Pharmaceuticals

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

Diversification Opportunities for Intel and Allena Pharmaceuticals

0.35
  Correlation Coefficient

Weak diversification

The 3 months correlation between Intel and Allena is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding Intel and Allena Pharmaceuticals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Allena Pharmaceuticals and Intel 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 Intel are associated (or correlated) with Allena Pharmaceuticals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Allena Pharmaceuticals has no effect on the direction of Intel i.e., Intel and Allena Pharmaceuticals go up and down completely randomly.

Pair Corralation between Intel and Allena Pharmaceuticals

Given the investment horizon of 90 days Intel is expected to generate 0.18 times more return on investment than Allena Pharmaceuticals. However, Intel is 5.43 times less risky than Allena Pharmaceuticals. It trades about -0.06 of its potential returns per unit of risk. Allena Pharmaceuticals is currently generating about -0.09 per unit of risk. If you would invest  5,444  in Intel on September 3, 2022 and sell it today you would lose (2,503)  from holding Intel or give up 45.98% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Weak
Accuracy96.27%
ValuesDaily Returns

Intel  vs.  Allena Pharmaceuticals

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

Intel Price Channel

Allena Pharmaceuticals 
Allena Performance
0 of 100
Over the last 90 days Allena Pharmaceuticals has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unsteady performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in January 2023. The current disturbance may also be a sign of long term up-swing for the company investors.

Intel and Allena Pharmaceuticals Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Intel and Allena Pharmaceuticals

The main advantage of trading using opposite Intel and Allena Pharmaceuticals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Intel position performs unexpectedly, Allena 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 Allena Pharmaceuticals will offset losses from the drop in Allena Pharmaceuticals' long position.
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The idea behind Intel and Allena 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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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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.

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