Correlation Between Alpha Teknova and Neptune Wellness

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

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

Diversification Opportunities for Alpha Teknova and Neptune Wellness

0.52

Correlation Coefficient

Alpha Teknova  Neptune Wellness

Very weak diversification

The 3 months correlation between Alpha and Neptune is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding Alpha Teknova and Neptune Wellness Solutions in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Neptune Wellness Sol and Alpha Teknova 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 Alpha Teknova are associated (or correlated) with Neptune Wellness. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Neptune Wellness Sol has no effect on the direction of Alpha Teknova i.e., Alpha Teknova and Neptune Wellness go up and down completely randomly.

Pair Corralation between Alpha Teknova and Neptune Wellness

Given the investment horizon of 90 days Alpha Teknova is expected to generate 0.37 times more return on investment than Neptune Wellness. However, Alpha Teknova is 2.7 times less risky than Neptune Wellness. It trades about 0.01 of its potential returns per unit of risk. Neptune Wellness Solutions is currently generating about -0.16 per unit of risk. If you would invest  206.00  in Alpha Teknova on February 23, 2024 and sell it today you would lose (31.00) from holding Alpha Teknova or give up 15.05% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	58.06%
Values	Daily Returns

Alpha Teknova  vs.  Neptune Wellness Solutions

Alpha Teknova

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Alpha Teknova has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in June 2024. The recent disarray may also be a sign of long period up-swing for the firm investors.

Neptune Wellness Sol

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Neptune Wellness Solutions has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in June 2024. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Alpha Teknova and Neptune Wellness

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

The idea behind Alpha Teknova and Neptune Wellness Solutions 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.