Correlation Between 22nd Century and Atai Life

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Can any of the company-specific risk be diversified away by investing in both 22nd Century and Atai Life 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 22nd Century and Atai Life into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between 22nd Century Group and Atai Life Sciences, you can compare the effects of market volatilities on 22nd Century and Atai Life 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 22nd Century with a short position of Atai Life. Check out your portfolio center. Please also check ongoing floating volatility patterns of 22nd Century and Atai Life.

Diversification Opportunities for 22nd Century and Atai Life

0.4
  Correlation Coefficient

Very weak diversification

The 3 months correlation between 22nd Century and Atai Life is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding 22nd Century Group and Atai Life Sciences in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Atai Life Sciences and 22nd Century 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 22nd Century Group are associated (or correlated) with Atai Life. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Atai Life Sciences has no effect on the direction of 22nd Century i.e., 22nd Century and Atai Life go up and down completely randomly.

Pair Corralation between 22nd Century and Atai Life

Given the investment horizon of 90 days 22nd Century Group is expected to under-perform the Atai Life. In addition to that, 22nd Century is 1.27 times more volatile than Atai Life Sciences. It trades about -0.02 of its total potential returns per unit of risk. Atai Life Sciences is currently generating about 0.05 per unit of volatility. If you would invest  299.00  in Atai Life Sciences on August 28, 2022 and sell it today you would earn a total of  10.00  from holding Atai Life Sciences or generate 3.34% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthWeak
Accuracy100.0%
ValuesDaily Returns

22nd Century Group  vs.  Atai Life Sciences

 Performance (%) 
       Timeline  
22nd Century Group 
22nd Century Performance
0 of 100
Over the last 90 days 22nd Century Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable forward indicators, 22nd Century is not utilizing all of its potentials. The new stock price disturbance, may contribute to mid-run losses for the stockholders.

22nd Century Price Channel

Atai Life Sciences 
Atai Life Performance
0 of 100
Over the last 90 days Atai Life Sciences 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 nearly stable which may send shares a bit higher in December 2022. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Atai Life Price Channel

22nd Century and Atai Life Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with 22nd Century and Atai Life

The main advantage of trading using opposite 22nd Century and Atai Life positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if 22nd Century position performs unexpectedly, Atai Life 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 Atai Life will offset losses from the drop in Atai Life's long position.
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The idea behind 22nd Century Group and Atai Life Sciences 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.

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