Correlation Between Aquestive Therapeutics and Royalty Management

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

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

Diversification Opportunities for Aquestive Therapeutics and Royalty Management

-0.19

Correlation Coefficient

Aquestive Therapeutics  Royalty Management

Good diversification

The 3 months correlation between Aquestive and Royalty is -0.19. Overlapping area represents the amount of risk that can be diversified away by holding Aquestive Therapeutics and Royalty Management Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Royalty Management 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 Royalty Management. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Royalty Management has no effect on the direction of Aquestive Therapeutics i.e., Aquestive Therapeutics and Royalty Management go up and down completely randomly.

Pair Corralation between Aquestive Therapeutics and Royalty Management

Given the investment horizon of 90 days Aquestive Therapeutics is expected to generate 0.83 times more return on investment than Royalty Management. However, Aquestive Therapeutics is 1.2 times less risky than Royalty Management. It trades about 0.05 of its potential returns per unit of risk. Royalty Management Holding is currently generating about -0.01 per unit of risk. If you would invest  256.00  in Aquestive Therapeutics on October 6, 2024 and sell it today you would earn a total of  102.00  from holding Aquestive Therapeutics or generate 39.84% return on investment over 90 days.

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

Aquestive Therapeutics  vs.  Royalty Management Holding

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 conflicting performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in February 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Royalty Management

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Royalty Management Holding are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of very fragile fundamental indicators, Royalty Management displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Aquestive Therapeutics and Royalty Management

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

The idea behind Aquestive Therapeutics and Royalty Management Holding 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.