Correlation Between Avenue Therapeutics and Checkpoint Therapeutics

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

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

Diversification Opportunities for Avenue Therapeutics and Checkpoint Therapeutics

-0.08

Correlation Coefficient

Avenue Therapeutics  Checkpoint Therapeutics

Good diversification

The 3 months correlation between Avenue and Checkpoint is -0.08. Overlapping area represents the amount of risk that can be diversified away by holding Avenue Therapeutics and Checkpoint Therapeutics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Checkpoint Therapeutics 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 Checkpoint Therapeutics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Checkpoint Therapeutics has no effect on the direction of Avenue Therapeutics i.e., Avenue Therapeutics and Checkpoint Therapeutics go up and down completely randomly.

Pair Corralation between Avenue Therapeutics and Checkpoint Therapeutics

Given the investment horizon of 90 days Avenue Therapeutics is expected to generate 1.04 times more return on investment than Checkpoint Therapeutics. However, Avenue Therapeutics is 1.04 times more volatile than Checkpoint Therapeutics. It trades about 0.05 of its potential returns per unit of risk. Checkpoint Therapeutics is currently generating about -0.12 per unit of risk. If you would invest  180.00  in Avenue Therapeutics on October 22, 2024 and sell it today you would earn a total of  5.00  from holding Avenue Therapeutics or generate 2.78% return on investment over 90 days.

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

Avenue Therapeutics  vs.  Checkpoint Therapeutics

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 latest inconsistent performance, the Stock's basic indicators remain strong and the recent confusion on Wall Street may also be a sign of long-lasting gains for the firm traders.

Checkpoint Therapeutics

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Checkpoint Therapeutics are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unfluctuating basic indicators, Checkpoint Therapeutics may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Avenue Therapeutics and Checkpoint Therapeutics

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

The idea behind Avenue Therapeutics and Checkpoint 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.

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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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.