Correlation Between Aptose Biosciences and Tempest Therapeutics

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

Diversification Opportunities for Aptose Biosciences and Tempest Therapeutics

0.62

Correlation Coefficient

Aptose Biosciences  Tempest Therapeutics

Poor diversification

The 3 months correlation between Aptose and Tempest is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Aptose Biosciences and Tempest Therapeutics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tempest 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 Tempest Therapeutics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tempest Therapeutics has no effect on the direction of Aptose Biosciences i.e., Aptose Biosciences and Tempest Therapeutics go up and down completely randomly.

Pair Corralation between Aptose Biosciences and Tempest Therapeutics

Given the investment horizon of 90 days Aptose Biosciences is expected to under-perform the Tempest Therapeutics. But the stock apears to be less risky and, when comparing its historical volatility, Aptose Biosciences is 9.1 times less risky than Tempest Therapeutics. The stock trades about -0.12 of its potential returns per unit of risk. The Tempest Therapeutics is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  119.00  in Tempest Therapeutics on September 16, 2024 and sell it today you would lose (39.00) from holding Tempest Therapeutics or give up 32.77% of portfolio value over 90 days.

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

Aptose Biosciences  vs.  Tempest Therapeutics

Aptose Biosciences

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Aptose Biosciences has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in January 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Tempest Therapeutics

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Tempest Therapeutics has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Aptose Biosciences and Tempest Therapeutics

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

The idea behind Aptose Biosciences and Tempest 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.