Correlation Between Aquestive Therapeutics and Omeros

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

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

Diversification Opportunities for Aquestive Therapeutics and Omeros

-0.53

Correlation Coefficient

Aquestive Therapeutics  Omeros

Excellent diversification

The 3 months correlation between Aquestive and Omeros is -0.53. Overlapping area represents the amount of risk that can be diversified away by holding Aquestive Therapeutics and Omeros in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Omeros and Aquestive Therapeutics 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 Aquestive Therapeutics are associated (or correlated) with Omeros. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Omeros has no effect on the direction of Aquestive Therapeutics i.e., Aquestive Therapeutics and Omeros go up and down completely randomly.

Pair Corralation between Aquestive Therapeutics and Omeros

Given the investment horizon of 90 days Aquestive Therapeutics is expected to under-perform the Omeros. But the stock apears to be less risky and, when comparing its historical volatility, Aquestive Therapeutics is 3.39 times less risky than Omeros. The stock trades about -0.31 of its potential returns per unit of risk. The Omeros is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest  592.00  in Omeros on September 17, 2024 and sell it today you would earn a total of  171.00  from holding Omeros or generate 28.89% return on investment over 90 days.

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

Aquestive Therapeutics  vs.  Omeros

Aquestive Therapeutics

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Aquestive Therapeutics has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain 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.

Omeros

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Omeros are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak technical and fundamental indicators, Omeros reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Aquestive Therapeutics and Omeros

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

The idea behind Aquestive Therapeutics and Omeros 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.