Correlation Between Athenex and THC Therapeutics
Can any of the company-specific risk be diversified away by investing in both Athenex and THC Therapeutics 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 Athenex and THC Therapeutics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Athenex and THC Therapeutics, you can compare the effects of market volatilities on Athenex and THC Therapeutics 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 Athenex with a short position of THC Therapeutics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Athenex and THC Therapeutics.
Diversification Opportunities for Athenex and THC Therapeutics
0.38 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Athenex and THC is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding Athenex and THC Therapeutics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on THC Therapeutics and Athenex 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 Athenex are associated (or correlated) with THC Therapeutics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of THC Therapeutics has no effect on the direction of Athenex i.e., Athenex and THC Therapeutics go up and down completely randomly.
Pair Corralation between Athenex and THC Therapeutics
If you would invest 0.04 in THC Therapeutics on August 28, 2024 and sell it today you would earn a total of 0.01 from holding THC Therapeutics or generate 25.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 4.55% |
| Values | Daily Returns |
Athenex vs. THC Therapeutics
Performance |
| Timeline |
| Athenex |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| THC Therapeutics |
Athenex and THC Therapeutics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Athenex and THC Therapeutics
The main advantage of trading using opposite Athenex and THC Therapeutics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Athenex position performs unexpectedly, THC Therapeutics 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 THC Therapeutics will offset losses from the drop in THC Therapeutics' long position.The idea behind Athenex and THC Therapeutics 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.| THC Therapeutics vs. Rezolute | THC Therapeutics vs. Tempest Therapeutics | THC Therapeutics vs. Forte Biosciences | THC Therapeutics vs. Dyadic International |
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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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