Correlation Between Allena Pharmaceuticals and PTC

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

Diversification Opportunities for Allena Pharmaceuticals and PTC

-0.43
  Correlation Coefficient

Very good diversification

The 3 months correlation between Allena and PTC is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding Allena Pharmaceuticals and PTC Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PTC Inc 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 PTC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PTC Inc has no effect on the direction of Allena Pharmaceuticals i.e., Allena Pharmaceuticals and PTC go up and down completely randomly.

Pair Corralation between Allena Pharmaceuticals and PTC

Given the investment horizon of 90 days Allena Pharmaceuticals is expected to under-perform the PTC. In addition to that, Allena Pharmaceuticals is 2.94 times more volatile than PTC Inc. It trades about -0.45 of its total potential returns per unit of risk. PTC Inc is currently generating about -0.08 per unit of volatility. If you would invest  12,521  in PTC Inc on September 8, 2022 and sell it today you would lose (395.00)  from holding PTC Inc or give up 3.15% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthVery Weak
Accuracy19.05%
ValuesDaily Returns

Allena Pharmaceuticals  vs.  PTC Inc

 Performance (%) 
       Timeline  
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 inconsistent 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.
PTC Inc 
PTC Performance
1 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in PTC Inc are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, PTC is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

PTC Price Channel

Allena Pharmaceuticals and PTC Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Allena Pharmaceuticals and PTC

The main advantage of trading using opposite Allena Pharmaceuticals and PTC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Allena Pharmaceuticals position performs unexpectedly, PTC 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 PTC will offset losses from the drop in PTC's long position.
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The idea behind Allena Pharmaceuticals and PTC Inc 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.

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