Correlation Between Axim Biotechnologies and Aridis Pharmaceuticals

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

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

Diversification Opportunities for Axim Biotechnologies and Aridis Pharmaceuticals

-0.5

Correlation Coefficient

Axim Biotechnologies  Aridis Pharmaceuticals

Very good diversification

The 3 months correlation between Axim and Aridis is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding Axim Biotechnologies and Aridis Pharmaceuticals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aridis Pharmaceuticals and Axim Biotechnologies 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 Axim Biotechnologies are associated (or correlated) with Aridis Pharmaceuticals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aridis Pharmaceuticals has no effect on the direction of Axim Biotechnologies i.e., Axim Biotechnologies and Aridis Pharmaceuticals go up and down completely randomly.

Pair Corralation between Axim Biotechnologies and Aridis Pharmaceuticals

Given the investment horizon of 90 days Axim Biotechnologies is expected to generate 0.95 times more return on investment than Aridis Pharmaceuticals. However, Axim Biotechnologies is 1.06 times less risky than Aridis Pharmaceuticals. It trades about 0.02 of its potential returns per unit of risk. Aridis Pharmaceuticals is currently generating about -0.02 per unit of risk. If you would invest  3.40  in Axim Biotechnologies on September 5, 2024 and sell it today you would lose (3.10) from holding Axim Biotechnologies or give up 91.18% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	29.96%
Values	Daily Returns

Axim Biotechnologies  vs.  Aridis Pharmaceuticals

Axim Biotechnologies

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Axim Biotechnologies are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of very weak forward indicators, Axim Biotechnologies displayed solid returns over the last few months and may actually be approaching a breakup point.

Aridis Pharmaceuticals

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Aridis Pharmaceuticals has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable fundamental indicators, Aridis Pharmaceuticals is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Axim Biotechnologies and Aridis Pharmaceuticals

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

The idea behind Axim Biotechnologies and Aridis 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 Stocks Directory module to find actively traded stocks across global markets.