Correlation Between ARYA Sciences and Afternext Healthtech

Can any of the company-specific risk be diversified away by investing in both ARYA Sciences and Afternext Healthtech 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 ARYA Sciences and Afternext Healthtech into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between ARYA Sciences Acquisition and Afternext Healthtech Acquisition, you can compare the effects of market volatilities on ARYA Sciences and Afternext Healthtech 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 ARYA Sciences with a short position of Afternext Healthtech. Check out your portfolio center. Please also check ongoing floating volatility patterns of ARYA Sciences and Afternext Healthtech.

Diversification Opportunities for ARYA Sciences and Afternext Healthtech

-0.68

Correlation Coefficient

ARYA Sciences  Afternext Healthtech

Excellent diversification

The 3 months correlation between ARYA and Afternext is -0.68. Overlapping area represents the amount of risk that can be diversified away by holding ARYA Sciences Acquisition and Afternext Healthtech Acquisiti in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Afternext Healthtech and ARYA Sciences 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 ARYA Sciences Acquisition are associated (or correlated) with Afternext Healthtech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Afternext Healthtech has no effect on the direction of ARYA Sciences i.e., ARYA Sciences and Afternext Healthtech go up and down completely randomly.

Pair Corralation between ARYA Sciences and Afternext Healthtech

If you would invest  1,039  in Afternext Healthtech Acquisition on October 25, 2024 and sell it today you would earn a total of  0.00  from holding Afternext Healthtech Acquisition or generate 0.0% return on investment over 90 days.

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

ARYA Sciences Acquisition  vs.  Afternext Healthtech Acquisiti

ARYA Sciences Acquisition

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ARYA Sciences Acquisition has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, ARYA Sciences is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Afternext Healthtech

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Afternext Healthtech Acquisition has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, Afternext Healthtech is not utilizing all of its potentials. The current stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with ARYA Sciences and Afternext Healthtech

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

The idea behind ARYA Sciences Acquisition and Afternext Healthtech Acquisition 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.