Correlation Between Aquestive Therapeutics and Redhill Biopharma

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

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

Diversification Opportunities for Aquestive Therapeutics and Redhill Biopharma

0.77

Correlation Coefficient

Aquestive Therapeutics  Redhill Biopharma

Poor diversification

The 3 months correlation between Aquestive and Redhill is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Aquestive Therapeutics and Redhill Biopharma in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Redhill Biopharma 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 Redhill Biopharma. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Redhill Biopharma has no effect on the direction of Aquestive Therapeutics i.e., Aquestive Therapeutics and Redhill Biopharma go up and down completely randomly.

Pair Corralation between Aquestive Therapeutics and Redhill Biopharma

Given the investment horizon of 90 days Aquestive Therapeutics is expected to generate 0.89 times more return on investment than Redhill Biopharma. However, Aquestive Therapeutics is 1.13 times less risky than Redhill Biopharma. It trades about -0.02 of its potential returns per unit of risk. Redhill Biopharma is currently generating about -0.23 per unit of risk. If you would invest  359.00  in Aquestive Therapeutics on December 23, 2024 and sell it today you would lose (38.00) from holding Aquestive Therapeutics or give up 10.58% of portfolio value over 90 days.

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

Aquestive Therapeutics  vs.  Redhill Biopharma

Aquestive Therapeutics

Risk-Adjusted Performance

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 comparatively stable basic indicators, Aquestive Therapeutics is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Redhill Biopharma

Risk-Adjusted Performance

Very Weak

Over the last 90 days Redhill Biopharma has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unfluctuating performance in the last few months, the Stock's technical indicators remain quite persistent which may send shares a bit higher in April 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Pair Trading with Aquestive Therapeutics and Redhill Biopharma

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

The idea behind Aquestive Therapeutics and Redhill Biopharma 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.