Correlation Between Halo Collective and Alimera Sciences

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

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

Diversification Opportunities for Halo Collective and Alimera Sciences

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Correlation Coefficient

Halo Collective  Alimera Sciences

Pay attention - limited upside

The 3 months correlation between Halo and Alimera is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Halo Collective and Alimera Sciences in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alimera Sciences and Halo Collective 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 Halo Collective are associated (or correlated) with Alimera Sciences. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alimera Sciences has no effect on the direction of Halo Collective i.e., Halo Collective and Alimera Sciences go up and down completely randomly.

Pair Corralation between Halo Collective and Alimera Sciences

Assuming the 90 days horizon Halo Collective is expected to generate 10.39 times more return on investment than Alimera Sciences. However, Halo Collective is 10.39 times more volatile than Alimera Sciences. It trades about 0.06 of its potential returns per unit of risk. Alimera Sciences is currently generating about 0.06 per unit of risk. If you would invest  0.02  in Halo Collective on August 24, 2024 and sell it today you would lose (0.01) from holding Halo Collective or give up 50.0% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	80.72%
Values	Daily Returns

Halo Collective  vs.  Alimera Sciences

Halo Collective

Risk-Adjusted Performance

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Very Weak

Over the last 90 days Halo Collective has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Halo Collective is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Alimera Sciences

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Alimera Sciences has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy forward indicators, Alimera Sciences is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Halo Collective and Alimera Sciences

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

The idea behind Halo Collective and Alimera 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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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.