Correlation Between Apellis Pharmaceuticals and Ascendis Pharma

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

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

Diversification Opportunities for Apellis Pharmaceuticals and Ascendis Pharma

0.01

Correlation Coefficient

Apellis Pharmaceuticals  Ascendis Pharma

Significant diversification

The 3 months correlation between Apellis and Ascendis is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding Apellis Pharmaceuticals and Ascendis Pharma AS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ascendis Pharma AS and Apellis Pharmaceuticals 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 Apellis Pharmaceuticals are associated (or correlated) with Ascendis Pharma. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ascendis Pharma AS has no effect on the direction of Apellis Pharmaceuticals i.e., Apellis Pharmaceuticals and Ascendis Pharma go up and down completely randomly.

Pair Corralation between Apellis Pharmaceuticals and Ascendis Pharma

Given the investment horizon of 90 days Apellis Pharmaceuticals is expected to under-perform the Ascendis Pharma. In addition to that, Apellis Pharmaceuticals is 1.16 times more volatile than Ascendis Pharma AS. It trades about -0.02 of its total potential returns per unit of risk. Ascendis Pharma AS is currently generating about 0.06 per unit of volatility. If you would invest  11,922  in Ascendis Pharma AS on September 13, 2024 and sell it today you would earn a total of  1,045  from holding Ascendis Pharma AS or generate 8.77% return on investment over 90 days.

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

Apellis Pharmaceuticals  vs.  Ascendis Pharma AS

Apellis Pharmaceuticals

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Apellis Pharmaceuticals has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable essential indicators, Apellis Pharmaceuticals is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Ascendis Pharma AS

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Ascendis Pharma AS are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain basic indicators, Ascendis Pharma may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Apellis Pharmaceuticals and Ascendis Pharma

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

The idea behind Apellis Pharmaceuticals and Ascendis Pharma AS 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.