Correlation Between Sonoma Pharmaceuticals and Aquestive Therapeutics
Can any of the company-specific risk be diversified away by investing in both Sonoma Pharmaceuticals 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 Sonoma Pharmaceuticals and Aquestive Therapeutics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sonoma Pharmaceuticals and Aquestive Therapeutics, you can compare the effects of market volatilities on Sonoma Pharmaceuticals 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 Sonoma Pharmaceuticals with a short position of Aquestive Therapeutics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sonoma Pharmaceuticals and Aquestive Therapeutics.
Diversification Opportunities for Sonoma Pharmaceuticals and Aquestive Therapeutics
-0.08 | Correlation Coefficient |
Good diversification
The 3 months correlation between Sonoma and Aquestive is -0.08. Overlapping area represents the amount of risk that can be diversified away by holding Sonoma Pharmaceuticals and Aquestive Therapeutics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aquestive Therapeutics and Sonoma Pharmaceuticals 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 Sonoma Pharmaceuticals 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 Sonoma Pharmaceuticals i.e., Sonoma Pharmaceuticals and Aquestive Therapeutics go up and down completely randomly.
Pair Corralation between Sonoma Pharmaceuticals and Aquestive Therapeutics
Given the investment horizon of 90 days Sonoma Pharmaceuticals is expected to under-perform the Aquestive Therapeutics. In addition to that, Sonoma Pharmaceuticals is 1.61 times more volatile than Aquestive Therapeutics. It trades about -0.02 of its total potential returns per unit of risk. Aquestive Therapeutics is currently generating about 0.1 per unit of volatility. If you would invest 86.00 in Aquestive Therapeutics on September 1, 2024 and sell it today you would earn a total of 423.00 from holding Aquestive Therapeutics or generate 491.86% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sonoma Pharmaceuticals vs. Aquestive Therapeutics
Performance |
| Timeline |
| Sonoma Pharmaceuticals |
| Aquestive Therapeutics |
Sonoma Pharmaceuticals and Aquestive Therapeutics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sonoma Pharmaceuticals and Aquestive Therapeutics
The main advantage of trading using opposite Sonoma Pharmaceuticals and Aquestive Therapeutics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sonoma Pharmaceuticals 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.| Sonoma Pharmaceuticals vs. China Pharma Holdings | Sonoma Pharmaceuticals vs. Universe Pharmaceuticals | Sonoma Pharmaceuticals vs. Akanda Corp | Sonoma Pharmaceuticals vs. Petros Pharmaceuticals |
| Aquestive Therapeutics vs. Evoke Pharma | Aquestive Therapeutics vs. Dynavax Technologies | Aquestive Therapeutics vs. Amphastar P | Aquestive Therapeutics vs. Lantheus Holdings |
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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