Correlation Between Acasti Pharma and Ibio

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

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

Diversification Opportunities for Acasti Pharma and Ibio

0.15

Correlation Coefficient

Acasti Pharma  Ibio

Average diversification

The 3 months correlation between Acasti and Ibio is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding Acasti Pharma and Ibio Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ibio Inc 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 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 Acasti Pharma i.e., Acasti Pharma and Ibio go up and down completely randomly.

Pair Corralation between Acasti Pharma and Ibio

Given the investment horizon of 90 days Acasti Pharma is expected to generate 0.37 times more return on investment than Ibio. However, Acasti Pharma is 2.69 times less risky than Ibio. It trades about 0.04 of its potential returns per unit of risk. Ibio Inc is currently generating about 0.01 per unit of risk. If you would invest  253.00  in Acasti Pharma on September 12, 2024 and sell it today you would earn a total of  84.00  from holding Acasti Pharma or generate 33.2% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	91.48%
Values	Daily Returns

Acasti Pharma  vs.  Ibio Inc

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.

Ibio Inc

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Ibio Inc are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of very weak forward indicators, Ibio displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Acasti Pharma and Ibio

The main advantage of trading using opposite Acasti Pharma and Ibio positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Acasti Pharma 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 Acasti Pharma 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.