Correlation Between Eagon Industrial and AptaBio Therapeutics

Can any of the company-specific risk be diversified away by investing in both Eagon Industrial and AptaBio 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 Eagon Industrial and AptaBio Therapeutics into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Eagon Industrial Co and AptaBio Therapeutics, you can compare the effects of market volatilities on Eagon Industrial and AptaBio 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 Eagon Industrial with a short position of AptaBio Therapeutics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Eagon Industrial and AptaBio Therapeutics.

Diversification Opportunities for Eagon Industrial and AptaBio Therapeutics

0.35

Correlation Coefficient

Eagon Industrial  AptaBio Therapeutics

Weak diversification

The 3 months correlation between Eagon and AptaBio is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding Eagon Industrial Co and AptaBio Therapeutics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AptaBio Therapeutics and Eagon Industrial 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 Eagon Industrial Co are associated (or correlated) with AptaBio Therapeutics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AptaBio Therapeutics has no effect on the direction of Eagon Industrial i.e., Eagon Industrial and AptaBio Therapeutics go up and down completely randomly.

Pair Corralation between Eagon Industrial and AptaBio Therapeutics

Assuming the 90 days trading horizon Eagon Industrial is expected to generate 1.4 times less return on investment than AptaBio Therapeutics. In addition to that, Eagon Industrial is 1.2 times more volatile than AptaBio Therapeutics. It trades about 0.06 of its total potential returns per unit of risk. AptaBio Therapeutics is currently generating about 0.11 per unit of volatility. If you would invest  652,000  in AptaBio Therapeutics on November 29, 2024 and sell it today you would earn a total of  148,000  from holding AptaBio Therapeutics or generate 22.7% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Eagon Industrial Co  vs.  AptaBio Therapeutics

Eagon Industrial

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Eagon Industrial Co are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Eagon Industrial sustained solid returns over the last few months and may actually be approaching a breakup point.

AptaBio Therapeutics

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in AptaBio Therapeutics are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, AptaBio Therapeutics sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Eagon Industrial and AptaBio Therapeutics

The main advantage of trading using opposite Eagon Industrial and AptaBio Therapeutics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Eagon Industrial position performs unexpectedly, AptaBio 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 AptaBio Therapeutics will offset losses from the drop in AptaBio Therapeutics' long position.

The idea behind Eagon Industrial Co and AptaBio 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.

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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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..