Correlation Between Adagene and Therapeutic Solutions

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

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

Diversification Opportunities for Adagene and Therapeutic Solutions

0.07

Correlation Coefficient

Adagene  Therapeutic Solutions

Significant diversification

The 3 months correlation between Adagene and Therapeutic is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding Adagene and Therapeutic Solutions Internat in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Therapeutic Solutions 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 Therapeutic Solutions. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Therapeutic Solutions has no effect on the direction of Adagene i.e., Adagene and Therapeutic Solutions go up and down completely randomly.

Pair Corralation between Adagene and Therapeutic Solutions

Given the investment horizon of 90 days Adagene is expected to under-perform the Therapeutic Solutions. But the stock apears to be less risky and, when comparing its historical volatility, Adagene is 8.09 times less risky than Therapeutic Solutions. The stock trades about -0.07 of its potential returns per unit of risk. The Therapeutic Solutions International is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest  0.02  in Therapeutic Solutions International on December 28, 2024 and sell it today you would earn a total of  0.00  from holding Therapeutic Solutions International or generate 0.0% return on investment over 90 days.

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

Adagene  vs.  Therapeutic Solutions Internat

Adagene

Risk-Adjusted Performance

Very Weak

Over the last 90 days Adagene has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unsteady performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Therapeutic Solutions

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Therapeutic Solutions International are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite fairly uncertain basic indicators, Therapeutic Solutions demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Adagene and Therapeutic Solutions

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

The idea behind Adagene and Therapeutic Solutions International 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.