Correlation Between Aptose Biosciences and Westaim Corp

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

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

Diversification Opportunities for Aptose Biosciences and Westaim Corp

0.21

Correlation Coefficient

Aptose Biosciences  Westaim Corp

Modest diversification

The 3 months correlation between Aptose and Westaim is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding Aptose Biosciences and Westaim Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Westaim Corp 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 Westaim Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Westaim Corp has no effect on the direction of Aptose Biosciences i.e., Aptose Biosciences and Westaim Corp go up and down completely randomly.

Pair Corralation between Aptose Biosciences and Westaim Corp

Assuming the 90 days trading horizon Aptose Biosciences is expected to generate 76.83 times more return on investment than Westaim Corp. However, Aptose Biosciences is 76.83 times more volatile than Westaim Corp. It trades about 0.12 of its potential returns per unit of risk. Westaim Corp is currently generating about 0.02 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 Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Aptose Biosciences  vs.  Westaim Corp

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.

Westaim Corp

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Westaim Corp are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, Westaim Corp is not utilizing all of its potentials. The current stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Aptose Biosciences and Westaim Corp

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

The idea behind Aptose Biosciences and Westaim Corp 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 Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.