Correlation Between Adagene and Quoin Pharmaceuticals

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

By analyzing existing cross correlation between Adagene and Quoin Pharmaceuticals Ltd, you can compare the effects of market volatilities on Adagene and Quoin Pharmaceuticals 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 Quoin Pharmaceuticals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Adagene and Quoin Pharmaceuticals.

Diversification Opportunities for Adagene and Quoin Pharmaceuticals

0.55

Correlation Coefficient

Adagene  Quoin Pharmaceuticals

Very weak diversification

The 3 months correlation between Adagene and Quoin is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding Adagene and Quoin Pharmaceuticals Ltd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Quoin Pharmaceuticals 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 Quoin Pharmaceuticals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Quoin Pharmaceuticals has no effect on the direction of Adagene i.e., Adagene and Quoin Pharmaceuticals go up and down completely randomly.

Pair Corralation between Adagene and Quoin Pharmaceuticals

Given the investment horizon of 90 days Adagene is expected to under-perform the Quoin Pharmaceuticals. But the stock apears to be less risky and, when comparing its historical volatility, Adagene is 1.11 times less risky than Quoin Pharmaceuticals. The stock trades about -0.1 of its potential returns per unit of risk. The Quoin Pharmaceuticals Ltd is currently generating about -0.06 of returns per unit of risk over similar time horizon. If you would invest  75.00  in Quoin Pharmaceuticals Ltd on September 22, 2024 and sell it today you would lose (18.00) from holding Quoin Pharmaceuticals Ltd or give up 24.0% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

Adagene  vs.  Quoin Pharmaceuticals Ltd

Adagene

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Adagene has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Adagene is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Quoin Pharmaceuticals

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Quoin Pharmaceuticals Ltd are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Quoin Pharmaceuticals showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Adagene and Quoin Pharmaceuticals

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

The idea behind Adagene and Quoin Pharmaceuticals Ltd 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.