Correlation Between AcelRx Pharmaceuticals and Verastem

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

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

Diversification Opportunities for AcelRx Pharmaceuticals and Verastem

0.0

Correlation Coefficient

AcelRx Pharmaceuticals  Verastem

Pay attention - limited upside

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

Pair Corralation between AcelRx Pharmaceuticals and Verastem

If you would invest  367.00  in Verastem on December 29, 2024 and sell it today you would earn a total of  252.00  from holding Verastem or generate 68.66% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

AcelRx Pharmaceuticals  vs.  Verastem

AcelRx Pharmaceuticals

Risk-Adjusted Performance

Very Weak

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

Verastem

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Verastem are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of very weak basic indicators, Verastem displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with AcelRx Pharmaceuticals and Verastem

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

The idea behind AcelRx Pharmaceuticals and Verastem 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.