Correlation Between DiaMedica Therapeutics and Arcutis Biotherapeutics
Can any of the company-specific risk be diversified away by investing in both DiaMedica Therapeutics and Arcutis Biotherapeutics 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 DiaMedica Therapeutics and Arcutis Biotherapeutics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between DiaMedica Therapeutics and Arcutis Biotherapeutics, you can compare the effects of market volatilities on DiaMedica Therapeutics and Arcutis Biotherapeutics 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 DiaMedica Therapeutics with a short position of Arcutis Biotherapeutics. Check out your portfolio center. Please also check ongoing floating volatility patterns of DiaMedica Therapeutics and Arcutis Biotherapeutics.
Diversification Opportunities for DiaMedica Therapeutics and Arcutis Biotherapeutics
0.82 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between DiaMedica and Arcutis is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding DiaMedica Therapeutics and Arcutis Biotherapeutics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Arcutis Biotherapeutics and DiaMedica 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 DiaMedica Therapeutics are associated (or correlated) with Arcutis Biotherapeutics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Arcutis Biotherapeutics has no effect on the direction of DiaMedica Therapeutics i.e., DiaMedica Therapeutics and Arcutis Biotherapeutics go up and down completely randomly.
Pair Corralation between DiaMedica Therapeutics and Arcutis Biotherapeutics
Given the investment horizon of 90 days DiaMedica Therapeutics is expected to generate 0.91 times more return on investment than Arcutis Biotherapeutics. However, DiaMedica Therapeutics is 1.09 times less risky than Arcutis Biotherapeutics. It trades about 0.08 of its potential returns per unit of risk. Arcutis Biotherapeutics is currently generating about 0.02 per unit of risk. If you would invest 152.00 in DiaMedica Therapeutics on November 2, 2024 and sell it today you would earn a total of 433.00 from holding DiaMedica Therapeutics or generate 284.87% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
DiaMedica Therapeutics vs. Arcutis Biotherapeutics
Performance |
| Timeline |
| DiaMedica Therapeutics |
| Arcutis Biotherapeutics |
DiaMedica Therapeutics and Arcutis Biotherapeutics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with DiaMedica Therapeutics and Arcutis Biotherapeutics
The main advantage of trading using opposite DiaMedica Therapeutics and Arcutis Biotherapeutics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if DiaMedica Therapeutics position performs unexpectedly, Arcutis Biotherapeutics 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 Arcutis Biotherapeutics will offset losses from the drop in Arcutis Biotherapeutics' long position.| DiaMedica Therapeutics vs. Milestone Pharmaceuticals | DiaMedica Therapeutics vs. Seres Therapeutics | DiaMedica Therapeutics vs. Inhibikase Therapeutics | DiaMedica Therapeutics vs. Oncolytics Biotech |
| Arcutis Biotherapeutics vs. Terns Pharmaceuticals | Arcutis Biotherapeutics vs. Amylyx Pharmaceuticals | Arcutis Biotherapeutics vs. Acumen Pharmaceuticals | Arcutis Biotherapeutics vs. Inozyme Pharma |
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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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