Correlation Between Adagene and Erasca
Can any of the company-specific risk be diversified away by investing in both Adagene and Erasca 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 Adagene and Erasca into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Adagene and Erasca Inc, you can compare the effects of market volatilities on Adagene and Erasca 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 Adagene with a short position of Erasca. Check out your portfolio center. Please also check ongoing floating volatility patterns of Adagene and Erasca.
Diversification Opportunities for Adagene and Erasca
Very weak diversification
The 3 months correlation between Adagene and Erasca is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding Adagene and Erasca Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Erasca Inc and Adagene 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 Adagene are associated (or correlated) with Erasca. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Erasca Inc has no effect on the direction of Adagene i.e., Adagene and Erasca go up and down completely randomly.
Pair Corralation between Adagene and Erasca
Given the investment horizon of 90 days Adagene is expected to under-perform the Erasca. In addition to that, Adagene is 1.34 times more volatile than Erasca Inc. It trades about -0.24 of its total potential returns per unit of risk. Erasca Inc is currently generating about 0.08 per unit of volatility. If you would invest 264.00 in Erasca Inc on August 29, 2024 and sell it today you would earn a total of 14.00 from holding Erasca Inc or generate 5.3% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Adagene vs. Erasca Inc
Performance |
| Timeline |
| Adagene |
| Erasca Inc |
Adagene and Erasca Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Adagene and Erasca
The main advantage of trading using opposite Adagene and Erasca positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Adagene position performs unexpectedly, Erasca 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 Erasca will offset losses from the drop in Erasca's long position.| Adagene vs. Eliem Therapeutics | Adagene vs. Scpharmaceuticals | Adagene vs. Milestone Pharmaceuticals | Adagene vs. Seres Therapeutics |
| Erasca vs. Eliem Therapeutics | Erasca vs. Scpharmaceuticals | Erasca vs. Milestone Pharmaceuticals | Erasca vs. Seres Therapeutics |
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 the Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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