Correlation Between Aldeyra and Eton Pharmaceuticals
Can any of the company-specific risk be diversified away by investing in both Aldeyra and Eton 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 Aldeyra and Eton Pharmaceuticals into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Aldeyra and Eton Pharmaceuticals, you can compare the effects of market volatilities on Aldeyra and Eton 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 Aldeyra with a short position of Eton Pharmaceuticals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aldeyra and Eton Pharmaceuticals.
Diversification Opportunities for Aldeyra and Eton Pharmaceuticals
-0.7 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Aldeyra and Eton is -0.7. Overlapping area represents the amount of risk that can be diversified away by holding Aldeyra and Eton Pharmaceuticals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eton Pharmaceuticals and Aldeyra 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 Aldeyra are associated (or correlated) with Eton Pharmaceuticals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eton Pharmaceuticals has no effect on the direction of Aldeyra i.e., Aldeyra and Eton Pharmaceuticals go up and down completely randomly.
Pair Corralation between Aldeyra and Eton Pharmaceuticals
Given the investment horizon of 90 days Aldeyra is expected to under-perform the Eton Pharmaceuticals. But the stock apears to be less risky and, when comparing its historical volatility, Aldeyra is 1.01 times less risky than Eton Pharmaceuticals. The stock trades about -0.12 of its potential returns per unit of risk. The Eton Pharmaceuticals is currently generating about 0.37 of returns per unit of risk over similar time horizon. If you would invest 842.00 in Eton Pharmaceuticals on August 27, 2024 and sell it today you would earn a total of 361.00 from holding Eton Pharmaceuticals or generate 42.87% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Aldeyra vs. Eton Pharmaceuticals
Performance |
| Timeline |
| Aldeyra |
| Eton Pharmaceuticals |
Aldeyra and Eton Pharmaceuticals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Aldeyra and Eton Pharmaceuticals
The main advantage of trading using opposite Aldeyra and Eton Pharmaceuticals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aldeyra position performs unexpectedly, Eton 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 Eton Pharmaceuticals will offset losses from the drop in Eton Pharmaceuticals' long position.| Aldeyra vs. Eliem Therapeutics | Aldeyra vs. HCW Biologics | Aldeyra vs. Scpharmaceuticals | Aldeyra vs. Milestone Pharmaceuticals |
| Eton Pharmaceuticals vs. Connect Biopharma Holdings | Eton Pharmaceuticals vs. Acumen Pharmaceuticals | Eton Pharmaceuticals vs. Nuvation Bio | Eton Pharmaceuticals vs. Eledon Pharmaceuticals |
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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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