Correlation Between AptaBio Therapeutics and Hanwha Aerospace

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

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

Diversification Opportunities for AptaBio Therapeutics and Hanwha Aerospace

-0.3

Correlation Coefficient

AptaBio Therapeutics  Hanwha Aerospace

Very good diversification

The 3 months correlation between AptaBio and Hanwha is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding AptaBio Therapeutics and Hanwha Aerospace Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hanwha Aerospace and AptaBio 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 AptaBio Therapeutics are associated (or correlated) with Hanwha Aerospace. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hanwha Aerospace has no effect on the direction of AptaBio Therapeutics i.e., AptaBio Therapeutics and Hanwha Aerospace go up and down completely randomly.

Pair Corralation between AptaBio Therapeutics and Hanwha Aerospace

Assuming the 90 days trading horizon AptaBio Therapeutics is expected to under-perform the Hanwha Aerospace. But the stock apears to be less risky and, when comparing its historical volatility, AptaBio Therapeutics is 1.38 times less risky than Hanwha Aerospace. The stock trades about -0.34 of its potential returns per unit of risk. The Hanwha Aerospace Co is currently generating about -0.13 of returns per unit of risk over similar time horizon. If you would invest  36,700,000  in Hanwha Aerospace Co on September 4, 2024 and sell it today you would lose (4,600,000) from holding Hanwha Aerospace Co or give up 12.53% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

AptaBio Therapeutics  vs.  Hanwha Aerospace Co

AptaBio Therapeutics

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days AptaBio Therapeutics has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Hanwha Aerospace

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Hanwha Aerospace Co are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Hanwha Aerospace is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with AptaBio Therapeutics and Hanwha Aerospace

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

The idea behind AptaBio Therapeutics and Hanwha Aerospace Co 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.