Correlation Between Athira Pharma and Cytokinetics

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

Diversification Opportunities for Athira Pharma and Cytokinetics

0.25
  Correlation Coefficient

Modest diversification

The 3 months correlation between Athira and Cytokinetics is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding Athira Pharma and Cytokinetics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cytokinetics and Athira Pharma 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 Athira Pharma are associated (or correlated) with Cytokinetics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cytokinetics has no effect on the direction of Athira Pharma i.e., Athira Pharma and Cytokinetics go up and down completely randomly.

Pair Corralation between Athira Pharma and Cytokinetics

Given the investment horizon of 90 days Athira Pharma is expected to under-perform the Cytokinetics. In addition to that, Athira Pharma is 1.25 times more volatile than Cytokinetics. It trades about -0.05 of its total potential returns per unit of risk. Cytokinetics is currently generating about 0.07 per unit of volatility. If you would invest  1,740  in Cytokinetics on July 5, 2022 and sell it today you would earn a total of  3,371  from holding Cytokinetics or generate 193.74% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Weak
Accuracy99.79%
ValuesDaily Returns

Athira Pharma  vs.  Cytokinetics

 Performance (%) 
       Timeline  
Athira Pharma 
Athira Performance
0 of 100
Over the last 90 days Athira Pharma has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's technical indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Athira Price Channel

Cytokinetics 
Cytokinetics Performance
5 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Cytokinetics are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite fairly weak basic indicators, Cytokinetics demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Cytokinetics Price Channel

Athira Pharma and Cytokinetics Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Athira Pharma and Cytokinetics

The main advantage of trading using opposite Athira Pharma and Cytokinetics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Athira Pharma position performs unexpectedly, Cytokinetics 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 Cytokinetics will offset losses from the drop in Cytokinetics' long position.
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The idea behind Athira Pharma and Cytokinetics 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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.

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