Correlation Between Aquestive Therapeutics and Redhill Biopharma
Can any of the company-specific risk be diversified away by investing in both Aquestive Therapeutics and Redhill Biopharma 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 Aquestive Therapeutics and Redhill Biopharma into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Aquestive Therapeutics and Redhill Biopharma, you can compare the effects of market volatilities on Aquestive Therapeutics and Redhill Biopharma 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 Aquestive Therapeutics with a short position of Redhill Biopharma. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aquestive Therapeutics and Redhill Biopharma.
Diversification Opportunities for Aquestive Therapeutics and Redhill Biopharma
-0.05 | Correlation Coefficient |
Good diversification
The 3 months correlation between Aquestive and Redhill is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding Aquestive Therapeutics and Redhill Biopharma in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Redhill Biopharma and Aquestive 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 Aquestive Therapeutics are associated (or correlated) with Redhill Biopharma. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Redhill Biopharma has no effect on the direction of Aquestive Therapeutics i.e., Aquestive Therapeutics and Redhill Biopharma go up and down completely randomly.
Pair Corralation between Aquestive Therapeutics and Redhill Biopharma
Given the investment horizon of 90 days Aquestive Therapeutics is expected to under-perform the Redhill Biopharma. But the stock apears to be less risky and, when comparing its historical volatility, Aquestive Therapeutics is 1.08 times less risky than Redhill Biopharma. The stock trades about -0.12 of its potential returns per unit of risk. The Redhill Biopharma is currently generating about -0.03 of returns per unit of risk over similar time horizon. If you would invest 821.00 in Redhill Biopharma on August 28, 2024 and sell it today you would lose (41.00) from holding Redhill Biopharma or give up 4.99% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Aquestive Therapeutics vs. Redhill Biopharma
Performance |
| Timeline |
| Aquestive Therapeutics |
| Redhill Biopharma |
Aquestive Therapeutics and Redhill Biopharma Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Aquestive Therapeutics and Redhill Biopharma
The main advantage of trading using opposite Aquestive Therapeutics and Redhill Biopharma positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aquestive Therapeutics position performs unexpectedly, Redhill Biopharma 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 Redhill Biopharma will offset losses from the drop in Redhill Biopharma's long position.| Aquestive Therapeutics vs. Capricor Therapeutics | Aquestive Therapeutics vs. Soleno Therapeutics | Aquestive Therapeutics vs. Bio Path Holdings | Aquestive Therapeutics vs. Moleculin Biotech |
| Redhill Biopharma vs. Organogenesis Holdings | Redhill Biopharma vs. Lifecore Biomedical | Redhill Biopharma vs. Collegium Pharmaceutical | Redhill Biopharma vs. Aquestive 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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