Correlation Between Adagene and ARCA Biopharma
Can any of the company-specific risk be diversified away by investing in both Adagene and ARCA Biopharma 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 Adagene and ARCA Biopharma into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Adagene and ARCA Biopharma, you can compare the effects of market volatilities on Adagene and ARCA Biopharma 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 Adagene with a short position of ARCA Biopharma. Check out your portfolio center. Please also check ongoing floating volatility patterns of Adagene and ARCA Biopharma.
Diversification Opportunities for Adagene and ARCA Biopharma
0.15 | Correlation Coefficient |
Average diversification
The 3 months correlation between Adagene and ARCA is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding Adagene and ARCA Biopharma in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ARCA Biopharma and Adagene 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 Adagene are associated (or correlated) with ARCA Biopharma. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ARCA Biopharma has no effect on the direction of Adagene i.e., Adagene and ARCA Biopharma go up and down completely randomly.
Pair Corralation between Adagene and ARCA Biopharma
Given the investment horizon of 90 days Adagene is expected to generate 0.72 times more return on investment than ARCA Biopharma. However, Adagene is 1.38 times less risky than ARCA Biopharma. It trades about 0.05 of its potential returns per unit of risk. ARCA Biopharma is currently generating about -0.02 per unit of risk. If you would invest 127.00 in Adagene on September 23, 2024 and sell it today you would earn a total of 78.00 from holding Adagene or generate 61.42% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Insignificant |
Accuracy | 84.31% |
Values | Daily Returns |
Adagene vs. ARCA Biopharma
Performance |
Timeline |
Adagene |
ARCA Biopharma |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Adagene and ARCA Biopharma Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Adagene and ARCA Biopharma
The main advantage of trading using opposite Adagene and ARCA Biopharma positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Adagene position performs unexpectedly, ARCA Biopharma 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 ARCA Biopharma will offset losses from the drop in ARCA Biopharma's long position.Adagene vs. Fate Therapeutics | Adagene vs. Sana Biotechnology | Adagene vs. Caribou Biosciences | Adagene vs. Arcus Biosciences |
ARCA Biopharma vs. Aerovate Therapeutics | ARCA Biopharma vs. Adagene | ARCA Biopharma vs. Acrivon Therapeutics, Common | ARCA Biopharma vs. Rezolute |
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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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