Correlation Between Ascendis Health and DRA Global

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

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

Diversification Opportunities for Ascendis Health and DRA Global

-0.47

Correlation Coefficient

Ascendis Health  DRA Global

Very good diversification

The 3 months correlation between Ascendis and DRA is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding Ascendis Health and DRA Global in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DRA Global and Ascendis Health 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 Ascendis Health are associated (or correlated) with DRA Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DRA Global has no effect on the direction of Ascendis Health i.e., Ascendis Health and DRA Global go up and down completely randomly.

Pair Corralation between Ascendis Health and DRA Global

Assuming the 90 days trading horizon Ascendis Health is expected to generate 1.06 times less return on investment than DRA Global. In addition to that, Ascendis Health is 1.78 times more volatile than DRA Global. It trades about 0.06 of its total potential returns per unit of risk. DRA Global is currently generating about 0.12 per unit of volatility. If you would invest  220,100  in DRA Global on October 26, 2024 and sell it today you would earn a total of  17,300  from holding DRA Global or generate 7.86% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	67.5%
Values	Daily Returns

Ascendis Health  vs.  DRA Global

Ascendis Health

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Ascendis Health are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady technical and fundamental indicators, Ascendis Health exhibited solid returns over the last few months and may actually be approaching a breakup point.

DRA Global

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Ascendis Health and DRA Global

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

The idea behind Ascendis Health and DRA Global 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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.