Correlation Between Equillium and Adagene
Can any of the company-specific risk be diversified away by investing in both Equillium and Adagene 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 Equillium and Adagene into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Equillium and Adagene, you can compare the effects of market volatilities on Equillium and Adagene 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 Equillium with a short position of Adagene. Check out your portfolio center. Please also check ongoing floating volatility patterns of Equillium and Adagene.
Diversification Opportunities for Equillium and Adagene
Poor diversification
The 3 months correlation between Equillium and Adagene is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Equillium and Adagene in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Adagene and Equillium 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 Equillium are associated (or correlated) with Adagene. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Adagene has no effect on the direction of Equillium i.e., Equillium and Adagene go up and down completely randomly.
Pair Corralation between Equillium and Adagene
Allowing for the 90-day total investment horizon Equillium is expected to generate 1.26 times more return on investment than Adagene. However, Equillium is 1.26 times more volatile than Adagene. It trades about 0.09 of its potential returns per unit of risk. Adagene is currently generating about -0.11 per unit of risk. If you would invest 60.00 in Equillium on October 20, 2024 and sell it today you would earn a total of 4.00 from holding Equillium or generate 6.67% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Equillium vs. Adagene
Performance |
| Timeline |
| Equillium |
| Adagene |
Equillium and Adagene Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Equillium and Adagene
The main advantage of trading using opposite Equillium and Adagene positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Equillium position performs unexpectedly, Adagene 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 Adagene will offset losses from the drop in Adagene's long position.| Equillium vs. Lyra Therapeutics | Equillium vs. Hookipa Pharma | Equillium vs. Jasper Therapeutics | Equillium vs. Cingulate Warrants |
| Adagene vs. Aerovate Therapeutics | Adagene vs. Acrivon Therapeutics, Common | Adagene vs. Rezolute | Adagene vs. AN2 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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