Correlation Between Ascelia Pharma and I Tech

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

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

Diversification Opportunities for Ascelia Pharma and I Tech

0.64

Correlation Coefficient

Ascelia Pharma  I Tech

Poor diversification

The 3 months correlation between Ascelia and ITECH is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Ascelia Pharma AB and I Tech in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on I Tech and Ascelia Pharma 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 Ascelia Pharma AB are associated (or correlated) with I Tech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of I Tech has no effect on the direction of Ascelia Pharma i.e., Ascelia Pharma and I Tech go up and down completely randomly.

Pair Corralation between Ascelia Pharma and I Tech

Assuming the 90 days trading horizon Ascelia Pharma AB is expected to generate 3.05 times more return on investment than I Tech. However, Ascelia Pharma is 3.05 times more volatile than I Tech. It trades about 0.06 of its potential returns per unit of risk. I Tech is currently generating about -0.14 per unit of risk. If you would invest  306.00  in Ascelia Pharma AB on October 24, 2024 and sell it today you would earn a total of  10.00  from holding Ascelia Pharma AB or generate 3.27% return on investment over 90 days.

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

Ascelia Pharma AB  vs.  I Tech

Ascelia Pharma AB

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Ascelia Pharma AB are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain technical and fundamental indicators, Ascelia Pharma unveiled solid returns over the last few months and may actually be approaching a breakup point.

I Tech

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in I Tech are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, I Tech unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Ascelia Pharma and I Tech

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

The idea behind Ascelia Pharma AB and I Tech 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 Global Correlations module to find global opportunities by holding instruments from different markets.