Correlation Between Aptose Biosciences and Knight Therapeutics

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

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

Diversification Opportunities for Aptose Biosciences and Knight Therapeutics

0.63

Correlation Coefficient

Aptose Biosciences  Knight Therapeutics

Poor diversification

The 3 months correlation between Aptose and Knight is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Aptose Biosciences and Knight Therapeutics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Knight Therapeutics 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 Knight Therapeutics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Knight Therapeutics has no effect on the direction of Aptose Biosciences i.e., Aptose Biosciences and Knight Therapeutics go up and down completely randomly.

Pair Corralation between Aptose Biosciences and Knight Therapeutics

Assuming the 90 days trading horizon Aptose Biosciences is expected to generate 68.02 times more return on investment than Knight Therapeutics. However, Aptose Biosciences is 68.02 times more volatile than Knight Therapeutics. It trades about 0.12 of its potential returns per unit of risk. Knight Therapeutics is currently generating about 0.14 per unit of risk. If you would invest  36.00  in Aptose Biosciences on December 29, 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 Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

Aptose Biosciences  vs.  Knight Therapeutics

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.

Knight Therapeutics

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Knight Therapeutics are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating fundamental indicators, Knight Therapeutics displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Aptose Biosciences and Knight Therapeutics

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

The idea behind Aptose Biosciences and Knight 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.

Check out your portfolio center.

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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..