Correlation Between HE Equipment and Aquestive Therapeutics
Can any of the company-specific risk be diversified away by investing in both HE Equipment 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 HE Equipment and Aquestive Therapeutics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between HE Equipment Services and Aquestive Therapeutics, you can compare the effects of market volatilities on HE Equipment 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 HE Equipment with a short position of Aquestive Therapeutics. Check out your portfolio center. Please also check ongoing floating volatility patterns of HE Equipment and Aquestive Therapeutics.
Diversification Opportunities for HE Equipment and Aquestive Therapeutics
0.35 | Correlation Coefficient |
Weak diversification
The 3 months correlation between HEES and Aquestive is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding HE Equipment Services and Aquestive Therapeutics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aquestive Therapeutics and HE Equipment 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 HE Equipment Services 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 HE Equipment i.e., HE Equipment and Aquestive Therapeutics go up and down completely randomly.
Pair Corralation between HE Equipment and Aquestive Therapeutics
Given the investment horizon of 90 days HE Equipment Services is expected to under-perform the Aquestive Therapeutics. But the stock apears to be less risky and, when comparing its historical volatility, HE Equipment Services is 1.57 times less risky than Aquestive Therapeutics. The stock trades about 0.0 of its potential returns per unit of risk. The Aquestive Therapeutics is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 407.00 in Aquestive Therapeutics on September 3, 2024 and sell it today you would earn a total of 102.00 from holding Aquestive Therapeutics or generate 25.06% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
HE Equipment Services vs. Aquestive Therapeutics
Performance |
| Timeline |
| HE Equipment Services |
| Aquestive Therapeutics |
HE Equipment and Aquestive Therapeutics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with HE Equipment and Aquestive Therapeutics
The main advantage of trading using opposite HE Equipment and Aquestive Therapeutics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if HE Equipment 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.| HE Equipment vs. GATX Corporation | HE Equipment vs. McGrath RentCorp | HE Equipment vs. Alta Equipment Group | HE Equipment vs. Ryder System |
| 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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