Correlation Between Aquestive Therapeutics and Saratoga Investment

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

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

Diversification Opportunities for Aquestive Therapeutics and Saratoga Investment

-0.31

Correlation Coefficient

Aquestive Therapeutics  Saratoga Investment

Very good diversification

The 3 months correlation between Aquestive and Saratoga is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding Aquestive Therapeutics and Saratoga Investment Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Saratoga Investment Corp 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 Saratoga Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Saratoga Investment Corp has no effect on the direction of Aquestive Therapeutics i.e., Aquestive Therapeutics and Saratoga Investment go up and down completely randomly.

Pair Corralation between Aquestive Therapeutics and Saratoga Investment

Given the investment horizon of 90 days Aquestive Therapeutics is expected to generate 5.27 times more return on investment than Saratoga Investment. However, Aquestive Therapeutics is 5.27 times more volatile than Saratoga Investment Corp. It trades about 0.05 of its potential returns per unit of risk. Saratoga Investment Corp is currently generating about 0.07 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.  Saratoga Investment Corp

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.

Saratoga Investment Corp

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Saratoga Investment Corp are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Even with relatively unsteady basic indicators, Saratoga Investment may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Aquestive Therapeutics and Saratoga Investment

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

The idea behind Aquestive Therapeutics and Saratoga Investment 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.