Correlation Between Aileron Therapeutics and Adagene
Can any of the company-specific risk be diversified away by investing in both Aileron Therapeutics and Adagene 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 Aileron Therapeutics and Adagene into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Aileron Therapeutics and Adagene, you can compare the effects of market volatilities on Aileron Therapeutics and Adagene 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 Aileron Therapeutics with a short position of Adagene. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aileron Therapeutics and Adagene.
Diversification Opportunities for Aileron Therapeutics and Adagene
-0.03 | Correlation Coefficient |
Good diversification
The 3 months correlation between Aileron and Adagene is -0.03. Overlapping area represents the amount of risk that can be diversified away by holding Aileron Therapeutics and Adagene in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Adagene and Aileron Therapeutics 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 Aileron Therapeutics are associated (or correlated) with Adagene. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Adagene has no effect on the direction of Aileron Therapeutics i.e., Aileron Therapeutics and Adagene go up and down completely randomly.
Pair Corralation between Aileron Therapeutics and Adagene
Given the investment horizon of 90 days Aileron Therapeutics is expected to under-perform the Adagene. But the stock apears to be less risky and, when comparing its historical volatility, Aileron Therapeutics is 1.0 times less risky than Adagene. The stock trades about -0.02 of its potential returns per unit of risk. The Adagene is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest 253.00 in Adagene on August 25, 2024 and sell it today you would lose (34.00) from holding Adagene or give up 13.44% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Aileron Therapeutics vs. Adagene
Performance |
| Timeline |
| Aileron Therapeutics |
| Adagene |
Aileron Therapeutics and Adagene Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Aileron Therapeutics and Adagene
The main advantage of trading using opposite Aileron Therapeutics and Adagene positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aileron Therapeutics position performs unexpectedly, Adagene 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 Adagene will offset losses from the drop in Adagene's long position.| Aileron Therapeutics vs. Bio Path Holdings | Aileron Therapeutics vs. Benitec Biopharma Ltd | Aileron Therapeutics vs. Artelo Biosciences | Aileron Therapeutics vs. Histogen |
| Adagene vs. Aerovate Therapeutics | Adagene vs. Acrivon Therapeutics, Common | Adagene vs. Rezolute | Adagene vs. AN2 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
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