Correlation Between LianBio ADR and Aldeyra
Can any of the company-specific risk be diversified away by investing in both LianBio ADR and Aldeyra 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 LianBio ADR and Aldeyra into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between LianBio ADR and Aldeyra, you can compare the effects of market volatilities on LianBio ADR and Aldeyra 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 LianBio ADR with a short position of Aldeyra. Check out your portfolio center. Please also check ongoing floating volatility patterns of LianBio ADR and Aldeyra.
Diversification Opportunities for LianBio ADR and Aldeyra
-0.3 | Correlation Coefficient |
Very good diversification
The 3 months correlation between LianBio and Aldeyra is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding LianBio ADR and Aldeyra in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aldeyra and LianBio ADR 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 LianBio ADR are associated (or correlated) with Aldeyra. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aldeyra has no effect on the direction of LianBio ADR i.e., LianBio ADR and Aldeyra go up and down completely randomly.
Pair Corralation between LianBio ADR and Aldeyra
Given the investment horizon of 90 days LianBio ADR is expected to generate 1.26 times less return on investment than Aldeyra. But when comparing it to its historical volatility, LianBio ADR is 1.68 times less risky than Aldeyra. It trades about 0.01 of its potential returns per unit of risk. Aldeyra is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest 1,026 in Aldeyra on August 31, 2024 and sell it today you would lose (532.00) from holding Aldeyra or give up 51.85% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 13.45% |
| Values | Daily Returns |
LianBio ADR vs. Aldeyra
Performance |
| Timeline |
| LianBio ADR |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Aldeyra |
LianBio ADR and Aldeyra Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with LianBio ADR and Aldeyra
The main advantage of trading using opposite LianBio ADR and Aldeyra positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LianBio ADR position performs unexpectedly, Aldeyra 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 Aldeyra will offset losses from the drop in Aldeyra's long position.| LianBio ADR vs. Sensei Biotherapeutics | LianBio ADR vs. NextCure | LianBio ADR vs. Nuvation Bio | LianBio ADR vs. Inozyme Pharma |
| Aldeyra vs. Tarsus Pharmaceuticals | Aldeyra vs. Travere Therapeutics | Aldeyra vs. Eton Pharmaceuticals | Aldeyra vs. Viridian 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
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