Correlation Between Aequus Pharmaceuticals and Filament Health

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

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

Diversification Opportunities for Aequus Pharmaceuticals and Filament Health

0.5

Correlation Coefficient

Aequus Pharmaceuticals  Filament Health

Very weak diversification

The 3 months correlation between Aequus and Filament is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding Aequus Pharmaceuticals and Filament Health Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Filament Health Corp and Aequus Pharmaceuticals 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 Aequus Pharmaceuticals are associated (or correlated) with Filament Health. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Filament Health Corp has no effect on the direction of Aequus Pharmaceuticals i.e., Aequus Pharmaceuticals and Filament Health go up and down completely randomly.

Pair Corralation between Aequus Pharmaceuticals and Filament Health

Assuming the 90 days horizon Aequus Pharmaceuticals is expected to generate 0.79 times more return on investment than Filament Health. However, Aequus Pharmaceuticals is 1.26 times less risky than Filament Health. It trades about 0.07 of its potential returns per unit of risk. Filament Health Corp is currently generating about 0.01 per unit of risk. If you would invest  0.44  in Aequus Pharmaceuticals on December 4, 2024 and sell it today you would earn a total of  0.03  from holding Aequus Pharmaceuticals or generate 6.82% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	93.65%
Values	Daily Returns

Aequus Pharmaceuticals  vs.  Filament Health Corp

Aequus Pharmaceuticals

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Aequus Pharmaceuticals are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak basic indicators, Aequus Pharmaceuticals reported solid returns over the last few months and may actually be approaching a breakup point.

Filament Health Corp

Risk-Adjusted Performance

Very Weak

Over the last 90 days Filament Health Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly fragile essential indicators, Filament Health reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Aequus Pharmaceuticals and Filament Health

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

The idea behind Aequus Pharmaceuticals and Filament Health 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.

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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.