Correlation Between Aion Therapeutic and Revive Therapeutics

Can any of the company-specific risk be diversified away by investing in both Aion Therapeutic and Revive 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 Revive 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 Revive Therapeutics, you can compare the effects of market volatilities on Aion Therapeutic and Revive 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 Revive Therapeutics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aion Therapeutic and Revive Therapeutics.

Diversification Opportunities for Aion Therapeutic and Revive Therapeutics

0.15

Correlation Coefficient

Aion Therapeutic  Revive Therapeutics

Average diversification

The 3 months correlation between Aion and Revive is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding Aion Therapeutic and Revive Therapeutics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Revive 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 Revive Therapeutics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Revive Therapeutics has no effect on the direction of Aion Therapeutic i.e., Aion Therapeutic and Revive Therapeutics go up and down completely randomly.

Pair Corralation between Aion Therapeutic and Revive Therapeutics

Assuming the 90 days horizon Aion Therapeutic is expected to generate 14.68 times more return on investment than Revive Therapeutics. However, Aion Therapeutic is 14.68 times more volatile than Revive Therapeutics. It trades about 0.23 of its potential returns per unit of risk. Revive Therapeutics is currently generating about 0.04 per unit of risk. If you would invest  0.41  in Aion Therapeutic on October 21, 2024 and sell it today you would earn a total of  0.69  from holding Aion Therapeutic or generate 168.29% return on investment over 90 days.

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

Aion Therapeutic  vs.  Revive Therapeutics

Aion Therapeutic

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Aion Therapeutic are ranked lower than 14 (%) 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.

Revive Therapeutics

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Revive Therapeutics are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly inconsistent basic indicators, Revive Therapeutics reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Aion Therapeutic and Revive Therapeutics

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

The idea behind Aion Therapeutic and Revive 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.