Correlation Between Agios Pharm and Achillion Pharmaceuticals

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

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

Diversification Opportunities for Agios Pharm and Achillion Pharmaceuticals

0.0

Correlation Coefficient

Agios Pharm  Achillion Pharmaceuticals

Pay attention - limited upside

The 3 months correlation between Agios and Achillion is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Agios Pharm and Achillion Pharmaceuticals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Achillion Pharmaceuticals and Agios Pharm 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 Agios Pharm are associated (or correlated) with Achillion Pharmaceuticals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Achillion Pharmaceuticals has no effect on the direction of Agios Pharm i.e., Agios Pharm and Achillion Pharmaceuticals go up and down completely randomly.

Pair Corralation between Agios Pharm and Achillion Pharmaceuticals

If you would invest (100.00) in Achillion Pharmaceuticals on September 13, 2024 and sell it today you would earn a total of  100.00  from holding Achillion Pharmaceuticals or generate -100.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Agios Pharm  vs.  Achillion Pharmaceuticals

Agios Pharm

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Agios Pharm has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy forward indicators, Agios Pharm is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Achillion Pharmaceuticals

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Achillion Pharmaceuticals has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy technical indicators, Achillion Pharmaceuticals is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Agios Pharm and Achillion Pharmaceuticals

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

The idea behind Agios Pharm and Achillion Pharmaceuticals 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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.