Correlation Between Aldeyra and CorMedix

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

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

Diversification Opportunities for Aldeyra and CorMedix

-0.53

Correlation Coefficient

Aldeyra  CorMedix

Excellent diversification

The 3 months correlation between Aldeyra and CorMedix is -0.53. Overlapping area represents the amount of risk that can be diversified away by holding Aldeyra and CorMedix in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CorMedix and Aldeyra 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 Aldeyra are associated (or correlated) with CorMedix. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CorMedix has no effect on the direction of Aldeyra i.e., Aldeyra and CorMedix go up and down completely randomly.

Pair Corralation between Aldeyra and CorMedix

Given the investment horizon of 90 days Aldeyra is expected to under-perform the CorMedix. But the stock apears to be less risky and, when comparing its historical volatility, Aldeyra is 1.28 times less risky than CorMedix. The stock trades about -0.05 of its potential returns per unit of risk. The CorMedix is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest  624.00  in CorMedix on August 30, 2024 and sell it today you would earn a total of  374.00  from holding CorMedix or generate 59.94% return on investment over 90 days.

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

Aldeyra  vs.  CorMedix

Aldeyra

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Aldeyra has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's fundamental indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

CorMedix

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in CorMedix are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain primary indicators, CorMedix exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Aldeyra and CorMedix

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

The idea behind Aldeyra and CorMedix 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.