Correlation Between Acasti Pharma and Hoth Therapeutics

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

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

Diversification Opportunities for Acasti Pharma and Hoth Therapeutics

-0.3

Correlation Coefficient

Acasti Pharma  Hoth Therapeutics

Very good diversification

The 3 months correlation between Acasti and Hoth is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding Acasti Pharma and Hoth Therapeutics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hoth Therapeutics and Acasti 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 Acasti Pharma are associated (or correlated) with Hoth Therapeutics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hoth Therapeutics has no effect on the direction of Acasti Pharma i.e., Acasti Pharma and Hoth Therapeutics go up and down completely randomly.

Pair Corralation between Acasti Pharma and Hoth Therapeutics

Given the investment horizon of 90 days Acasti Pharma is expected to generate 0.64 times more return on investment than Hoth Therapeutics. However, Acasti Pharma is 1.56 times less risky than Hoth Therapeutics. It trades about 0.03 of its potential returns per unit of risk. Hoth Therapeutics is currently generating about -0.03 per unit of risk. If you would invest  302.00  in Acasti Pharma on September 23, 2024 and sell it today you would earn a total of  35.00  from holding Acasti Pharma or generate 11.59% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	92.15%
Values	Daily Returns

Acasti Pharma  vs.  Hoth Therapeutics

Acasti Pharma

Risk-Adjusted Performance

0 of 100

Solid

Over the last 90 days Acasti Pharma has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively weak basic indicators, Acasti Pharma unveiled solid returns over the last few months and may actually be approaching a breakup point.

Hoth Therapeutics

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Hoth Therapeutics has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest inconsistent performance, the Stock's basic indicators remain strong and the recent confusion on Wall Street may also be a sign of long-lasting gains for the firm traders.

Pair Trading with Acasti Pharma and Hoth Therapeutics

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

The idea behind Acasti Pharma and Hoth 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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.