Correlation Between Connect Biopharma and Aquestive Therapeutics
Can any of the company-specific risk be diversified away by investing in both Connect Biopharma and Aquestive 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 Connect Biopharma and Aquestive Therapeutics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Connect Biopharma Holdings and Aquestive Therapeutics, you can compare the effects of market volatilities on Connect Biopharma and Aquestive 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 Connect Biopharma with a short position of Aquestive Therapeutics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Connect Biopharma and Aquestive Therapeutics.
Diversification Opportunities for Connect Biopharma and Aquestive Therapeutics
-0.07 | Correlation Coefficient |
Good diversification
The 3 months correlation between Connect and Aquestive is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding Connect Biopharma Holdings and Aquestive Therapeutics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aquestive Therapeutics and Connect Biopharma 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 Connect Biopharma Holdings are associated (or correlated) with Aquestive Therapeutics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aquestive Therapeutics has no effect on the direction of Connect Biopharma i.e., Connect Biopharma and Aquestive Therapeutics go up and down completely randomly.
Pair Corralation between Connect Biopharma and Aquestive Therapeutics
Given the investment horizon of 90 days Connect Biopharma Holdings is expected to under-perform the Aquestive Therapeutics. In addition to that, Connect Biopharma is 1.41 times more volatile than Aquestive Therapeutics. It trades about -0.03 of its total potential returns per unit of risk. Aquestive Therapeutics is currently generating about 0.12 per unit of volatility. If you would invest 299.00 in Aquestive Therapeutics on September 3, 2024 and sell it today you would earn a total of 210.00 from holding Aquestive Therapeutics or generate 70.23% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Connect Biopharma Holdings vs. Aquestive Therapeutics
Performance |
| Timeline |
| Connect Biopharma |
| Aquestive Therapeutics |
Connect Biopharma and Aquestive Therapeutics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Connect Biopharma and Aquestive Therapeutics
The main advantage of trading using opposite Connect Biopharma and Aquestive Therapeutics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Connect Biopharma position performs unexpectedly, Aquestive 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 Aquestive Therapeutics will offset losses from the drop in Aquestive Therapeutics' long position.| Connect Biopharma vs. DiaMedica Therapeutics | Connect Biopharma vs. Lyra Therapeutics | Connect Biopharma vs. Centessa Pharmaceuticals PLC |
| Aquestive Therapeutics vs. Connect Biopharma Holdings | Aquestive Therapeutics vs. Acumen Pharmaceuticals | Aquestive Therapeutics vs. Nuvation Bio | Aquestive Therapeutics 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 Global Correlations module to find global opportunities by holding instruments from different markets.
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