Correlation Between Aptose Biosciences and Cipher Pharmaceuticals

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

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

Diversification Opportunities for Aptose Biosciences and Cipher Pharmaceuticals

-0.67

Correlation Coefficient

Aptose Biosciences  Cipher Pharmaceuticals

Excellent diversification

The 3 months correlation between Aptose and Cipher is -0.67. Overlapping area represents the amount of risk that can be diversified away by holding Aptose Biosciences and Cipher Pharmaceuticals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cipher Pharmaceuticals and Aptose Biosciences 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 Aptose Biosciences are associated (or correlated) with Cipher Pharmaceuticals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cipher Pharmaceuticals has no effect on the direction of Aptose Biosciences i.e., Aptose Biosciences and Cipher Pharmaceuticals go up and down completely randomly.

Pair Corralation between Aptose Biosciences and Cipher Pharmaceuticals

Assuming the 90 days trading horizon Aptose Biosciences is expected to generate 36.41 times more return on investment than Cipher Pharmaceuticals. However, Aptose Biosciences is 36.41 times more volatile than Cipher Pharmaceuticals. It trades about 0.12 of its potential returns per unit of risk. Cipher Pharmaceuticals is currently generating about -0.04 per unit of risk. If you would invest  36.00  in Aptose Biosciences on December 30, 2024 and sell it today you would earn a total of  445.00  from holding Aptose Biosciences or generate 1236.11% return on investment over 90 days.

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

Aptose Biosciences  vs.  Cipher Pharmaceuticals

Aptose Biosciences

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Aptose Biosciences are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Aptose Biosciences displayed solid returns over the last few months and may actually be approaching a breakup point.

Cipher Pharmaceuticals

Risk-Adjusted Performance

Very Weak

Over the last 90 days Cipher Pharmaceuticals has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unfluctuating performance, the Stock's technical indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Pair Trading with Aptose Biosciences and Cipher Pharmaceuticals

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

The idea behind Aptose Biosciences and Cipher Pharmaceuticals 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.