Correlation Between Ascletis Pharma and Xenon Pharmaceuticals

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

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

Diversification Opportunities for Ascletis Pharma and Xenon Pharmaceuticals

-0.85

Correlation Coefficient

Ascletis Pharma  Xenon Pharmaceuticals

Pay attention - limited upside

The 3 months correlation between Ascletis and Xenon is -0.85. Overlapping area represents the amount of risk that can be diversified away by holding Ascletis Pharma and Xenon Pharmaceuticals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Xenon Pharmaceuticals and Ascletis Pharma 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 Ascletis Pharma are associated (or correlated) with Xenon Pharmaceuticals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Xenon Pharmaceuticals has no effect on the direction of Ascletis Pharma i.e., Ascletis Pharma and Xenon Pharmaceuticals go up and down completely randomly.

Pair Corralation between Ascletis Pharma and Xenon Pharmaceuticals

Assuming the 90 days horizon Ascletis Pharma is expected to generate 10.93 times more return on investment than Xenon Pharmaceuticals. However, Ascletis Pharma is 10.93 times more volatile than Xenon Pharmaceuticals. It trades about 0.17 of its potential returns per unit of risk. Xenon Pharmaceuticals is currently generating about -0.08 per unit of risk. If you would invest  24.00  in Ascletis Pharma on December 29, 2024 and sell it today you would earn a total of  96.00  from holding Ascletis Pharma or generate 400.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Significant
Accuracy	95.31%
Values	Daily Returns

Ascletis Pharma  vs.  Xenon Pharmaceuticals

Ascletis Pharma

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Ascletis Pharma are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile essential indicators, Ascletis Pharma reported solid returns over the last few months and may actually be approaching a breakup point.

Xenon Pharmaceuticals

Risk-Adjusted Performance

Very Weak

Over the last 90 days Xenon Pharmaceuticals has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest conflicting performance, the Stock's basic indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Pair Trading with Ascletis Pharma and Xenon Pharmaceuticals

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

The idea behind Ascletis Pharma and Xenon Pharmaceuticals 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.