Correlation Between ACST Old and Ibio

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

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

Diversification Opportunities for ACST Old and Ibio

-0.28

Correlation Coefficient

ACST Old  Ibio

Very good diversification

The 3 months correlation between ACST and Ibio is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding ACST Old and Ibio Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ibio Inc and ACST Old 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 ACST Old are associated (or correlated) with Ibio. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ibio Inc has no effect on the direction of ACST Old i.e., ACST Old and Ibio go up and down completely randomly.

Pair Corralation between ACST Old and Ibio

Given the investment horizon of 90 days ACST Old is expected to generate 2.3 times less return on investment than Ibio. But when comparing it to its historical volatility, ACST Old is 2.65 times less risky than Ibio. It trades about 0.02 of its potential returns per unit of risk. Ibio Inc is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  860.00  in Ibio Inc on October 9, 2024 and sell it today you would lose (614.00) from holding Ibio Inc or give up 71.4% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	90.78%
Values	Daily Returns

ACST Old  vs.  Ibio Inc

ACST Old

Risk-Adjusted Performance

0 of 100

Insignificant

Over the last 90 days ACST Old has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively weak basic indicators, ACST Old may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Ibio Inc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Ibio Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's forward indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Pair Trading with ACST Old and Ibio

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

The idea behind ACST Old and Ibio Inc 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.