Correlation Between Aion Therapeutic and Crescita Therapeutics

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

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

Diversification Opportunities for Aion Therapeutic and Crescita Therapeutics

0.48

Correlation Coefficient

Aion Therapeutic  Crescita Therapeutics

Very weak diversification

The 3 months correlation between Aion and Crescita is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding Aion Therapeutic and Crescita Therapeutics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Crescita Therapeutics 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 Crescita Therapeutics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Crescita Therapeutics has no effect on the direction of Aion Therapeutic i.e., Aion Therapeutic and Crescita Therapeutics go up and down completely randomly.

Pair Corralation between Aion Therapeutic and Crescita Therapeutics

Assuming the 90 days horizon Aion Therapeutic is expected to generate 14.99 times more return on investment than Crescita Therapeutics. However, Aion Therapeutic is 14.99 times more volatile than Crescita Therapeutics. It trades about 0.02 of its potential returns per unit of risk. Crescita Therapeutics is currently generating about -0.13 per unit of risk. If you would invest  1.54  in Aion Therapeutic on December 28, 2024 and sell it today you would lose (0.99) from holding Aion Therapeutic or give up 64.29% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.39%
Values	Daily Returns

Aion Therapeutic  vs.  Crescita Therapeutics

Aion Therapeutic

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Aion Therapeutic are ranked lower than 1 (%) 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.

Crescita Therapeutics

Risk-Adjusted Performance

Very Weak

Over the last 90 days Crescita Therapeutics has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak 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.

Pair Trading with Aion Therapeutic and Crescita Therapeutics

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

The idea behind Aion Therapeutic and Crescita Therapeutics 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.