Correlation Between Adcock Ingram and Ascendis Health

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

By analyzing existing cross correlation between Adcock Ingram Holdings and Ascendis Health, you can compare the effects of market volatilities on Adcock Ingram and Ascendis Health 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 Adcock Ingram with a short position of Ascendis Health. Check out your portfolio center. Please also check ongoing floating volatility patterns of Adcock Ingram and Ascendis Health.

Diversification Opportunities for Adcock Ingram and Ascendis Health

0.37

Correlation Coefficient

Adcock Ingram  Ascendis Health

Weak diversification

The 3 months correlation between Adcock and Ascendis is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding Adcock Ingram Holdings and Ascendis Health in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ascendis Health and Adcock Ingram 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 Adcock Ingram Holdings are associated (or correlated) with Ascendis Health. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ascendis Health has no effect on the direction of Adcock Ingram i.e., Adcock Ingram and Ascendis Health go up and down completely randomly.

Pair Corralation between Adcock Ingram and Ascendis Health

Assuming the 90 days trading horizon Adcock Ingram Holdings is expected to under-perform the Ascendis Health. But the stock apears to be less risky and, when comparing its historical volatility, Adcock Ingram Holdings is 2.82 times less risky than Ascendis Health. The stock trades about -0.36 of its potential returns per unit of risk. The Ascendis Health is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest  9,100  in Ascendis Health on December 30, 2024 and sell it today you would lose (900.00) from holding Ascendis Health or give up 9.89% of portfolio value over 90 days.

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

Adcock Ingram Holdings  vs.  Ascendis Health

Adcock Ingram Holdings

Risk-Adjusted Performance

Very Weak

Over the last 90 days Adcock Ingram Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's technical and fundamental indicators remain rather sound which may send shares a bit higher in April 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Ascendis Health

Risk-Adjusted Performance

Very Weak

Over the last 90 days Ascendis Health has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, Ascendis Health is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Adcock Ingram and Ascendis Health

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

The idea behind Adcock Ingram Holdings and Ascendis Health 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.