Correlation Between TRON and Amicus Therapeutics
Can any of the company-specific risk be diversified away by investing in both TRON and Amicus 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 TRON and Amicus Therapeutics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between TRON and Amicus Therapeutics, you can compare the effects of market volatilities on TRON and Amicus 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 TRON with a short position of Amicus Therapeutics. Check out your portfolio center. Please also check ongoing floating volatility patterns of TRON and Amicus Therapeutics.
Diversification Opportunities for TRON and Amicus Therapeutics
-0.25 | Correlation Coefficient |
Very good diversification
The 3 months correlation between TRON and Amicus is -0.25. Overlapping area represents the amount of risk that can be diversified away by holding TRON and Amicus Therapeutics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Amicus Therapeutics and TRON 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 TRON are associated (or correlated) with Amicus Therapeutics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Amicus Therapeutics has no effect on the direction of TRON i.e., TRON and Amicus Therapeutics go up and down completely randomly.
Pair Corralation between TRON and Amicus Therapeutics
Assuming the 90 days trading horizon TRON is expected to generate 3.09 times more return on investment than Amicus Therapeutics. However, TRON is 3.09 times more volatile than Amicus Therapeutics. It trades about 0.08 of its potential returns per unit of risk. Amicus Therapeutics is currently generating about -0.01 per unit of risk. If you would invest 6.67 in TRON on November 2, 2024 and sell it today you would earn a total of 18.33 from holding TRON or generate 274.81% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 60.32% |
| Values | Daily Returns |
TRON vs. Amicus Therapeutics
Performance |
| Timeline |
| TRON |
| Amicus Therapeutics |
TRON and Amicus Therapeutics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with TRON and Amicus Therapeutics
The main advantage of trading using opposite TRON and Amicus Therapeutics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if TRON position performs unexpectedly, Amicus 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 Amicus Therapeutics will offset losses from the drop in Amicus Therapeutics' long position.The idea behind TRON and Amicus Therapeutics pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Amicus Therapeutics vs. Incyte | Amicus Therapeutics vs. Denali Therapeutics | Amicus Therapeutics vs. argenx NV ADR | Amicus Therapeutics vs. Harmony Biosciences 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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