Correlation Between Allena Pharmaceuticals and Regeneron Pharmaceuticals

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

Diversification Opportunities for Allena Pharmaceuticals and Regeneron Pharmaceuticals

-0.75
  Correlation Coefficient

Pay attention - limited upside

The 3 months correlation between Allena and Regeneron is -0.75. Overlapping area represents the amount of risk that can be diversified away by holding Allena Pharmaceuticals Inc and Regeneron Pharmaceuticals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Regeneron Pharmaceuticals 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 Regeneron Pharmaceuticals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Regeneron Pharmaceuticals has no effect on the direction of Allena Pharmaceuticals i.e., Allena Pharmaceuticals and Regeneron Pharmaceuticals go up and down completely randomly.

Pair Corralation between Allena Pharmaceuticals and Regeneron Pharmaceuticals

Given the investment horizon of 90 days Allena Pharmaceuticals is expected to under-perform the Regeneron Pharmaceuticals. In addition to that, Allena Pharmaceuticals is 3.49 times more volatile than Regeneron Pharmaceuticals. It trades about -0.31 of its total potential returns per unit of risk. Regeneron Pharmaceuticals is currently generating about 0.1 per unit of volatility. If you would invest  61,446  in Regeneron Pharmaceuticals on July 9, 2022 and sell it today you would earn a total of  11,740  from holding Regeneron Pharmaceuticals or generate 19.11% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthWeak
Accuracy82.54%
ValuesDaily Returns

Allena Pharmaceuticals Inc  vs.  Regeneron Pharmaceuticals

 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 weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in November 2022. The current disturbance may also be a sign of long term up-swing for the company investors.
Regeneron Pharmaceuticals 
Regeneron Performance
8 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Regeneron Pharmaceuticals are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting technical and fundamental indicators, Regeneron Pharmaceuticals disclosed solid returns over the last few months and may actually be approaching a breakup point.

Regeneron Price Channel

Allena Pharmaceuticals and Regeneron Pharmaceuticals Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Allena Pharmaceuticals and Regeneron Pharmaceuticals

The main advantage of trading using opposite Allena Pharmaceuticals and Regeneron Pharmaceuticals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Allena Pharmaceuticals position performs unexpectedly, Regeneron 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 Regeneron Pharmaceuticals will offset losses from the drop in Regeneron Pharmaceuticals' long position.
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The idea behind Allena Pharmaceuticals and Regeneron 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.

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