Correlation Between Aquestive Therapeutics and Zeo Energy

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

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

Diversification Opportunities for Aquestive Therapeutics and Zeo Energy

-0.77

Correlation Coefficient

Aquestive Therapeutics  Zeo Energy

Pay attention - limited upside

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

Pair Corralation between Aquestive Therapeutics and Zeo Energy

Given the investment horizon of 90 days Aquestive Therapeutics is expected to under-perform the Zeo Energy. But the stock apears to be less risky and, when comparing its historical volatility, Aquestive Therapeutics is 3.45 times less risky than Zeo Energy. The stock trades about -0.22 of its potential returns per unit of risk. The Zeo Energy Corp is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  265.00  in Zeo Energy Corp on October 10, 2024 and sell it today you would lose (30.00) from holding Zeo Energy Corp or give up 11.32% of portfolio value over 90 days.

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

Aquestive Therapeutics  vs.  Zeo Energy 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.

Zeo Energy Corp

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Zeo Energy Corp are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of very unsteady technical and fundamental indicators, Zeo Energy displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Aquestive Therapeutics and Zeo Energy

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

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