Correlation Between Arch Biopartners and Aptose Biosciences

Can any of the company-specific risk be diversified away by investing in both Arch Biopartners and Aptose Biosciences 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 Arch Biopartners and Aptose Biosciences into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Arch Biopartners and Aptose Biosciences, you can compare the effects of market volatilities on Arch Biopartners and Aptose Biosciences 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 Arch Biopartners with a short position of Aptose Biosciences. Check out your portfolio center. Please also check ongoing floating volatility patterns of Arch Biopartners and Aptose Biosciences.

Diversification Opportunities for Arch Biopartners and Aptose Biosciences

0.04

Correlation Coefficient

Arch Biopartners  Aptose Biosciences

Significant diversification

The 3 months correlation between Arch and Aptose is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding Arch Biopartners and Aptose Biosciences in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aptose Biosciences and Arch Biopartners 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 Arch Biopartners are associated (or correlated) with Aptose Biosciences. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aptose Biosciences has no effect on the direction of Arch Biopartners i.e., Arch Biopartners and Aptose Biosciences go up and down completely randomly.

Pair Corralation between Arch Biopartners and Aptose Biosciences

Assuming the 90 days trading horizon Arch Biopartners is expected to under-perform the Aptose Biosciences. But the stock apears to be less risky and, when comparing its historical volatility, Arch Biopartners is 5.26 times less risky than Aptose Biosciences. The stock trades about -0.09 of its potential returns per unit of risk. The Aptose Biosciences is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest  55.00  in Aptose Biosciences on September 23, 2024 and sell it today you would lose (13.00) from holding Aptose Biosciences or give up 23.64% of portfolio value over 90 days.

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

Arch Biopartners  vs.  Aptose Biosciences

Arch Biopartners

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Arch Biopartners are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unfluctuating fundamental indicators, Arch Biopartners may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Aptose Biosciences

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Aptose Biosciences has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Aptose Biosciences is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Arch Biopartners and Aptose Biosciences

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

The idea behind Arch Biopartners and Aptose Biosciences 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.