Correlation Between Annexon and Acumen Pharmaceuticals

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Can any of the company-specific risk be diversified away by investing in both Annexon and Acumen 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 Annexon and Acumen Pharmaceuticals into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Annexon and Acumen Pharmaceuticals, you can compare the effects of market volatilities on Annexon and Acumen 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 Annexon with a short position of Acumen Pharmaceuticals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Annexon and Acumen Pharmaceuticals.

Diversification Opportunities for Annexon and Acumen Pharmaceuticals

0.47
  Correlation Coefficient

Very weak diversification

The 3 months correlation between Annexon and Acumen is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding Annexon and Acumen Pharmaceuticals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Acumen Pharmaceuticals and Annexon 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 Annexon are associated (or correlated) with Acumen Pharmaceuticals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Acumen Pharmaceuticals has no effect on the direction of Annexon i.e., Annexon and Acumen Pharmaceuticals go up and down completely randomly.

Pair Corralation between Annexon and Acumen Pharmaceuticals

Given the investment horizon of 90 days Annexon is expected to generate 0.79 times more return on investment than Acumen Pharmaceuticals. However, Annexon is 1.27 times less risky than Acumen Pharmaceuticals. It trades about -0.03 of its potential returns per unit of risk. Acumen Pharmaceuticals is currently generating about -0.03 per unit of risk. If you would invest  594.00  in Annexon on August 28, 2024 and sell it today you would lose (65.00) from holding Annexon or give up 10.94% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthWeak
Accuracy100.0%
ValuesDaily Returns

Annexon  vs.  Acumen Pharmaceuticals

 Performance 
       Timeline  
Annexon 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Annexon has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unfluctuating performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.
Acumen Pharmaceuticals 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Acumen Pharmaceuticals has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unfluctuating performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Annexon and Acumen Pharmaceuticals Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Annexon and Acumen Pharmaceuticals

The main advantage of trading using opposite Annexon and Acumen Pharmaceuticals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Annexon position performs unexpectedly, Acumen 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 Acumen Pharmaceuticals will offset losses from the drop in Acumen Pharmaceuticals' long position.
The idea behind Annexon and Acumen Pharmaceuticals 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.
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.

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