Correlation Between Aion Therapeutic and CareRx

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

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

Diversification Opportunities for Aion Therapeutic and CareRx

-0.29

Correlation Coefficient

Aion Therapeutic  CareRx

Very good diversification

The 3 months correlation between Aion and CareRx is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding Aion Therapeutic and CareRx in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CareRx and Aion Therapeutic 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 Aion Therapeutic are associated (or correlated) with CareRx. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CareRx has no effect on the direction of Aion Therapeutic i.e., Aion Therapeutic and CareRx go up and down completely randomly.

Pair Corralation between Aion Therapeutic and CareRx

Assuming the 90 days horizon Aion Therapeutic is expected to generate 23.7 times more return on investment than CareRx. However, Aion Therapeutic is 23.7 times more volatile than CareRx. It trades about 0.12 of its potential returns per unit of risk. CareRx is currently generating about 0.22 per unit of risk. If you would invest  0.41  in Aion Therapeutic on December 20, 2024 and sell it today you would earn a total of  0.14  from holding Aion Therapeutic or generate 34.15% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.41%
Values	Daily Returns

Aion Therapeutic  vs.  CareRx

Aion Therapeutic

Risk-Adjusted Performance

OK

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

CareRx

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in CareRx are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile technical indicators, CareRx reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Aion Therapeutic and CareRx

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

The idea behind Aion Therapeutic and CareRx 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.