Correlation Between Target and Aequus Pharmaceuticals

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

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

Diversification Opportunities for Target and Aequus Pharmaceuticals

-0.3

Correlation Coefficient

Target  Aequus Pharmaceuticals

Very good diversification

The 3 months correlation between Target and Aequus is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding Target Group and Aequus Pharmaceuticals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aequus Pharmaceuticals and Target 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 Target Group are associated (or correlated) with Aequus Pharmaceuticals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aequus Pharmaceuticals has no effect on the direction of Target i.e., Target and Aequus Pharmaceuticals go up and down completely randomly.

Pair Corralation between Target and Aequus Pharmaceuticals

Given the investment horizon of 90 days Target Group is expected to generate 1.34 times more return on investment than Aequus Pharmaceuticals. However, Target is 1.34 times more volatile than Aequus Pharmaceuticals. It trades about 0.11 of its potential returns per unit of risk. Aequus Pharmaceuticals is currently generating about 0.05 per unit of risk. If you would invest  0.17  in Target Group on December 28, 2024 and sell it today you would earn a total of  0.05  from holding Target Group or generate 29.41% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	95.24%
Values	Daily Returns

Target Group  vs.  Aequus Pharmaceuticals

Target Group

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Target Group are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of fairly fragile fundamental indicators, Target showed solid returns over the last few months and may actually be approaching a breakup point.

Aequus Pharmaceuticals

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Aequus Pharmaceuticals are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak basic indicators, Aequus Pharmaceuticals reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Target and Aequus Pharmaceuticals

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

The idea behind Target Group and Aequus 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.