Correlation Between Allakos and Infinity Pharmaceuticals

Can any of the company-specific risk be diversified away by investing in both Allakos and Infinity 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 Allakos and Infinity Pharmaceuticals into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Allakos and Infinity Pharmaceuticals, you can compare the effects of market volatilities on Allakos and Infinity 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 Allakos with a short position of Infinity Pharmaceuticals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Allakos and Infinity Pharmaceuticals.

Diversification Opportunities for Allakos and Infinity Pharmaceuticals

0.25

Correlation Coefficient

Allakos  Infinity Pharmaceuticals

Modest diversification

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

Pair Corralation between Allakos and Infinity Pharmaceuticals

Given the investment horizon of 90 days Allakos is expected to generate 0.53 times more return on investment than Infinity Pharmaceuticals. However, Allakos is 1.88 times less risky than Infinity Pharmaceuticals. It trades about -0.05 of its potential returns per unit of risk. Infinity Pharmaceuticals is currently generating about -0.05 per unit of risk. If you would invest  421.00  in Allakos on January 21, 2024 and sell it today you would lose (314.00) from holding Allakos or give up 74.58% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	39.36%
Values	Daily Returns

Allakos  vs.  Infinity Pharmaceuticals

Allakos

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Allakos has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent essential indicators, Allakos is not utilizing all of its potentials. The newest stock price mess, may contribute to short-term losses for the institutional investors.

Infinity Pharmaceuticals

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Infinity Pharmaceuticals has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong technical and fundamental indicators, Infinity Pharmaceuticals is not utilizing all of its potentials. The latest stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with Allakos and Infinity Pharmaceuticals

The main advantage of trading using opposite Allakos and Infinity Pharmaceuticals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Allakos position performs unexpectedly, Infinity 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 Infinity Pharmaceuticals will offset losses from the drop in Infinity Pharmaceuticals' long position.

The idea behind Allakos and Infinity 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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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 the Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.