Correlation Between Biodesix and Aclaris Therapeutics

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

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

Diversification Opportunities for Biodesix and Aclaris Therapeutics

0.8

Correlation Coefficient

Biodesix  Aclaris Therapeutics

Very poor diversification

The 3 months correlation between Biodesix and Aclaris is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Biodesix and Aclaris Therapeutics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aclaris Therapeutics and Biodesix 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 Biodesix are associated (or correlated) with Aclaris Therapeutics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aclaris Therapeutics has no effect on the direction of Biodesix i.e., Biodesix and Aclaris Therapeutics go up and down completely randomly.

Pair Corralation between Biodesix and Aclaris Therapeutics

Given the investment horizon of 90 days Biodesix is expected to under-perform the Aclaris Therapeutics. In addition to that, Biodesix is 1.75 times more volatile than Aclaris Therapeutics. It trades about -0.21 of its total potential returns per unit of risk. Aclaris Therapeutics is currently generating about -0.22 per unit of volatility. If you would invest  248.00  in Aclaris Therapeutics on December 30, 2024 and sell it today you would lose (89.00) from holding Aclaris Therapeutics or give up 35.89% of portfolio value over 90 days.

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

Biodesix  vs.  Aclaris Therapeutics

Biodesix

Risk-Adjusted Performance

Very Weak

Over the last 90 days Biodesix has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of inconsistent performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Aclaris Therapeutics

Risk-Adjusted Performance

Very Weak

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

Pair Trading with Biodesix and Aclaris Therapeutics

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

The idea behind Biodesix and Aclaris 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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.