Correlation Between Avenue Therapeutics and Aceragen

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

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

Diversification Opportunities for Avenue Therapeutics and Aceragen

0.41

Correlation Coefficient

Avenue Therapeutics  Aceragen

Very weak diversification

The 3 months correlation between Avenue and Aceragen is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding Avenue Therapeutics and Aceragen in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aceragen and Avenue Therapeutics 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 Avenue Therapeutics are associated (or correlated) with Aceragen. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aceragen has no effect on the direction of Avenue Therapeutics i.e., Avenue Therapeutics and Aceragen go up and down completely randomly.

Pair Corralation between Avenue Therapeutics and Aceragen

If you would invest  75.00  in Aceragen on September 12, 2024 and sell it today you would earn a total of  0.00  from holding Aceragen or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	1.56%
Values	Daily Returns

Avenue Therapeutics  vs.  Aceragen

Avenue Therapeutics

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Avenue Therapeutics has generated negative risk-adjusted returns adding no value to investors with long positions. Despite inconsistent performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in January 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Aceragen

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Avenue Therapeutics and Aceragen

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

The idea behind Avenue Therapeutics and Aceragen 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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.