Correlation Between Aclaris Therapeutics and Medpace Holdings

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

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

Diversification Opportunities for Aclaris Therapeutics and Medpace Holdings

0.0

Correlation Coefficient

Aclaris Therapeutics  Medpace Holdings

Pay attention - limited upside

The 3 months correlation between Aclaris and Medpace is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Aclaris Therapeutics and Medpace Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Medpace Holdings and Aclaris 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 Aclaris Therapeutics are associated (or correlated) with Medpace Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Medpace Holdings has no effect on the direction of Aclaris Therapeutics i.e., Aclaris Therapeutics and Medpace Holdings go up and down completely randomly.

Pair Corralation between Aclaris Therapeutics and Medpace Holdings

Given the investment horizon of 90 days Aclaris Therapeutics is expected to generate 4.32 times more return on investment than Medpace Holdings. However, Aclaris Therapeutics is 4.32 times more volatile than Medpace Holdings. It trades about 0.22 of its potential returns per unit of risk. Medpace Holdings is currently generating about -0.02 per unit of risk. If you would invest  121.00  in Aclaris Therapeutics on September 21, 2024 and sell it today you would earn a total of  187.00  from holding Aclaris Therapeutics or generate 154.55% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Aclaris Therapeutics  vs.  Medpace Holdings

Aclaris Therapeutics

Risk-Adjusted Performance

14 of 100

Good

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

Medpace Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Aclaris Therapeutics and Medpace Holdings

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

The idea behind Aclaris Therapeutics and Medpace Holdings 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.

Check out your portfolio center.

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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.