Correlation Between Acumen Pharmaceuticals and Topaz

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

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

Diversification Opportunities for Acumen Pharmaceuticals and Topaz

0.39

Correlation Coefficient

Acumen Pharmaceuticals  Topaz

Weak diversification

The 3 months correlation between Acumen and Topaz is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding Acumen Pharmaceuticals and Topaz Solar Farms in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Topaz Solar Farms 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 Topaz. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Topaz Solar Farms has no effect on the direction of Acumen Pharmaceuticals i.e., Acumen Pharmaceuticals and Topaz go up and down completely randomly.

Pair Corralation between Acumen Pharmaceuticals and Topaz

Given the investment horizon of 90 days Acumen Pharmaceuticals is expected to under-perform the Topaz. In addition to that, Acumen Pharmaceuticals is 11.47 times more volatile than Topaz Solar Farms. It trades about -0.03 of its total potential returns per unit of risk. Topaz Solar Farms is currently generating about -0.01 per unit of volatility. If you would invest  10,010  in Topaz Solar Farms on September 14, 2024 and sell it today you would lose (19.00) from holding Topaz Solar Farms or give up 0.19% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	46.03%
Values	Daily Returns

Acumen Pharmaceuticals  vs.  Topaz Solar Farms

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 latest inconsistent performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Topaz Solar Farms

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Acumen Pharmaceuticals and Topaz

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

The idea behind Acumen Pharmaceuticals and Topaz Solar Farms 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.