Correlation Between Astar and Er Therapeutics

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

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

Diversification Opportunities for Astar and Er Therapeutics

0.0

Correlation Coefficient

Astar  Er Therapeutics

Pay attention - limited upside

The 3 months correlation between Astar and PNGM is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Astar and Er Therapeutics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Er Therapeutics and Astar 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 Astar are associated (or correlated) with Er Therapeutics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Er Therapeutics has no effect on the direction of Astar i.e., Astar and Er Therapeutics go up and down completely randomly.

Pair Corralation between Astar and Er Therapeutics

If you would invest  6.24  in Astar on October 12, 2024 and sell it today you would lose (0.23) from holding Astar or give up 3.69% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	98.44%
Values	Daily Returns

Astar  vs.  Er Therapeutics

Astar

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Astar are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound fundamental indicators, Astar is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Er Therapeutics

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Astar and Er Therapeutics

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

The idea behind Astar and Er Therapeutics 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.