Correlation Between Iterum Therapeutics and Aqua Metals
Can any of the company-specific risk be diversified away by investing in both Iterum Therapeutics and Aqua Metals 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 Iterum Therapeutics and Aqua Metals into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Iterum Therapeutics PLC and Aqua Metals, you can compare the effects of market volatilities on Iterum Therapeutics and Aqua Metals 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 Iterum Therapeutics with a short position of Aqua Metals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Iterum Therapeutics and Aqua Metals.
Diversification Opportunities for Iterum Therapeutics and Aqua Metals
0.61 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Iterum and Aqua is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Iterum Therapeutics PLC and Aqua Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aqua Metals and Iterum 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 Iterum Therapeutics PLC are associated (or correlated) with Aqua Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aqua Metals has no effect on the direction of Iterum Therapeutics i.e., Iterum Therapeutics and Aqua Metals go up and down completely randomly.
Pair Corralation between Iterum Therapeutics and Aqua Metals
Given the investment horizon of 90 days Iterum Therapeutics PLC is expected to under-perform the Aqua Metals. But the stock apears to be less risky and, when comparing its historical volatility, Iterum Therapeutics PLC is 2.16 times less risky than Aqua Metals. The stock trades about -0.32 of its potential returns per unit of risk. The Aqua Metals is currently generating about -0.08 of returns per unit of risk over similar time horizon. If you would invest 249.00 in Aqua Metals on November 9, 2024 and sell it today you would lose (30.00) from holding Aqua Metals or give up 12.05% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Iterum Therapeutics PLC vs. Aqua Metals
Performance |
| Timeline |
| Iterum Therapeutics PLC |
| Aqua Metals |
Iterum Therapeutics and Aqua Metals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Iterum Therapeutics and Aqua Metals
The main advantage of trading using opposite Iterum Therapeutics and Aqua Metals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Iterum Therapeutics position performs unexpectedly, Aqua Metals 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 Aqua Metals will offset losses from the drop in Aqua Metals' long position.| Iterum Therapeutics vs. Adial Pharmaceuticals | Iterum Therapeutics vs. Tonix Pharmaceuticals Holding | Iterum Therapeutics vs. Fortress Biotech | Iterum Therapeutics vs. Eyenovia |
| Aqua Metals vs. LanzaTech Global | Aqua Metals vs. Waste Management | Aqua Metals vs. Clean Harbors | Aqua Metals vs. Casella Waste Systems |
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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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