Correlation Between Adagene and Protext Mobility

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

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

Diversification Opportunities for Adagene and Protext Mobility

0.11

Correlation Coefficient

Adagene  Protext Mobility

Average diversification

The 3 months correlation between Adagene and Protext is 0.11. Overlapping area represents the amount of risk that can be diversified away by holding Adagene and Protext Mobility in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Protext Mobility 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 Protext Mobility. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Protext Mobility has no effect on the direction of Adagene i.e., Adagene and Protext Mobility go up and down completely randomly.

Pair Corralation between Adagene and Protext Mobility

Given the investment horizon of 90 days Adagene is expected to under-perform the Protext Mobility. But the stock apears to be less risky and, when comparing its historical volatility, Adagene is 2.85 times less risky than Protext Mobility. The stock trades about -0.1 of its potential returns per unit of risk. The Protext Mobility is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  0.09  in Protext Mobility on December 29, 2024 and sell it today you would earn a total of  0.00  from holding Protext Mobility 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.  Protext Mobility

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.

Protext Mobility

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Protext Mobility are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of very weak basic indicators, Protext Mobility displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Adagene and Protext Mobility

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

The idea behind Adagene and Protext Mobility 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.