Correlation Between Acumen Pharmaceuticals and DISCOVERY

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

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

Diversification Opportunities for Acumen Pharmaceuticals and DISCOVERY

0.15

Correlation Coefficient

Acumen Pharmaceuticals  DISCOVERY

Average diversification

The 3 months correlation between Acumen and DISCOVERY is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding Acumen Pharmaceuticals and DISCOVERY MUNICATIONS LLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DISCOVERY MUNICATIONS LLC 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 DISCOVERY. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DISCOVERY MUNICATIONS LLC has no effect on the direction of Acumen Pharmaceuticals i.e., Acumen Pharmaceuticals and DISCOVERY go up and down completely randomly.

Pair Corralation between Acumen Pharmaceuticals and DISCOVERY

Given the investment horizon of 90 days Acumen Pharmaceuticals is expected to under-perform the DISCOVERY. In addition to that, Acumen Pharmaceuticals is 8.03 times more volatile than DISCOVERY MUNICATIONS LLC. It trades about -0.06 of its total potential returns per unit of risk. DISCOVERY MUNICATIONS LLC is currently generating about -0.2 per unit of volatility. If you would invest  9,972  in DISCOVERY MUNICATIONS LLC on October 24, 2024 and sell it today you would lose (222.00) from holding DISCOVERY MUNICATIONS LLC or give up 2.23% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	90.0%
Values	Daily Returns

Acumen Pharmaceuticals  vs.  DISCOVERY MUNICATIONS LLC

Acumen Pharmaceuticals

Risk-Adjusted Performance

0 of 100

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 February 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

DISCOVERY MUNICATIONS LLC

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days DISCOVERY MUNICATIONS LLC has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, DISCOVERY is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Acumen Pharmaceuticals and DISCOVERY

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

The idea behind Acumen Pharmaceuticals and DISCOVERY MUNICATIONS LLC 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.