Correlation Between Acumen Pharmaceuticals and Starbucks

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

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

Diversification Opportunities for Acumen Pharmaceuticals and Starbucks

-0.52

Correlation Coefficient

Acumen Pharmaceuticals  Starbucks

Excellent diversification

The 3 months correlation between Acumen and Starbucks is -0.52. Overlapping area represents the amount of risk that can be diversified away by holding Acumen Pharmaceuticals and Starbucks in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Starbucks and Acumen 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 Acumen Pharmaceuticals are associated (or correlated) with Starbucks. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Starbucks has no effect on the direction of Acumen Pharmaceuticals i.e., Acumen Pharmaceuticals and Starbucks go up and down completely randomly.

Pair Corralation between Acumen Pharmaceuticals and Starbucks

Given the investment horizon of 90 days Acumen Pharmaceuticals is expected to under-perform the Starbucks. In addition to that, Acumen Pharmaceuticals is 2.26 times more volatile than Starbucks. It trades about -0.25 of its total potential returns per unit of risk. Starbucks is currently generating about 0.15 per unit of volatility. If you would invest  10,096  in Starbucks on December 1, 2024 and sell it today you would earn a total of  1,485  from holding Starbucks or generate 14.71% return on investment over 90 days.

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

Acumen Pharmaceuticals  vs.  Starbucks

Acumen Pharmaceuticals

Risk-Adjusted Performance

Very Weak

Over the last 90 days Acumen Pharmaceuticals has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in April 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Starbucks

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Starbucks are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of fairly fragile basic indicators, Starbucks showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Acumen Pharmaceuticals and Starbucks

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

The idea behind Acumen Pharmaceuticals and Starbucks 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.