Correlation Between Acer Therapeutics and Spero Therapeutics

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

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

Diversification Opportunities for Acer Therapeutics and Spero Therapeutics

0.11

Correlation Coefficient

Acer Therapeutics  Spero Therapeutics

Average diversification

The 3 months correlation between Acer and Spero is 0.11. Overlapping area represents the amount of risk that can be diversified away by holding Acer Therapeutics and Spero Therapeutics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Spero Therapeutics and Acer 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 Acer Therapeutics are associated (or correlated) with Spero Therapeutics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Spero Therapeutics has no effect on the direction of Acer Therapeutics i.e., Acer Therapeutics and Spero Therapeutics go up and down completely randomly.

Pair Corralation between Acer Therapeutics and Spero Therapeutics

If you would invest  84.00  in Acer Therapeutics on September 17, 2024 and sell it today you would earn a total of  0.00  from holding Acer Therapeutics or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	5.0%
Values	Daily Returns

Acer Therapeutics  vs.  Spero Therapeutics

Acer Therapeutics

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Acer Therapeutics has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable technical and fundamental indicators, Acer Therapeutics is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Spero Therapeutics

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Spero Therapeutics has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of inconsistent performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in January 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with Acer Therapeutics and Spero Therapeutics

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

The idea behind Acer Therapeutics and Spero Therapeutics 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.