Correlation Between Aytu BioScience and Aquestive Therapeutics

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

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

Diversification Opportunities for Aytu BioScience and Aquestive Therapeutics

-0.1

Correlation Coefficient

Aytu BioScience  Aquestive Therapeutics

Good diversification

The 3 months correlation between Aytu and Aquestive is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding Aytu BioScience and Aquestive Therapeutics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aquestive Therapeutics and Aytu BioScience 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 Aytu BioScience are associated (or correlated) with Aquestive Therapeutics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aquestive Therapeutics has no effect on the direction of Aytu BioScience i.e., Aytu BioScience and Aquestive Therapeutics go up and down completely randomly.

Pair Corralation between Aytu BioScience and Aquestive Therapeutics

Given the investment horizon of 90 days Aytu BioScience is expected to under-perform the Aquestive Therapeutics. But the stock apears to be less risky and, when comparing its historical volatility, Aytu BioScience is 1.05 times less risky than Aquestive Therapeutics. The stock trades about -0.16 of its potential returns per unit of risk. The Aquestive Therapeutics is currently generating about -0.13 of returns per unit of risk over similar time horizon. If you would invest  515.00  in Aquestive Therapeutics on September 5, 2024 and sell it today you would lose (76.00) from holding Aquestive Therapeutics or give up 14.76% of portfolio value over 90 days.

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

Aytu BioScience  vs.  Aquestive Therapeutics

Aytu BioScience

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Aytu BioScience has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Aquestive Therapeutics

Risk-Adjusted Performance

2 of 100

Weak

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

Pair Trading with Aytu BioScience and Aquestive Therapeutics

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

The idea behind Aytu BioScience and Aquestive 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.