Correlation Between Chongqing Rural and Aquestive Therapeutics

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

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

Diversification Opportunities for Chongqing Rural and Aquestive Therapeutics

-0.78

Correlation Coefficient

Chongqing Rural  Aquestive Therapeutics

Pay attention - limited upside

The 3 months correlation between Chongqing and Aquestive is -0.78. Overlapping area represents the amount of risk that can be diversified away by holding Chongqing Rural Commercial and Aquestive Therapeutics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aquestive Therapeutics and Chongqing Rural 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 Chongqing Rural Commercial 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 Chongqing Rural i.e., Chongqing Rural and Aquestive Therapeutics go up and down completely randomly.

Pair Corralation between Chongqing Rural and Aquestive Therapeutics

Assuming the 90 days horizon Chongqing Rural Commercial is expected to generate 1.22 times more return on investment than Aquestive Therapeutics. However, Chongqing Rural is 1.22 times more volatile than Aquestive Therapeutics. It trades about 0.07 of its potential returns per unit of risk. Aquestive Therapeutics is currently generating about 0.08 per unit of risk. If you would invest  1,626  in Chongqing Rural Commercial on October 4, 2024 and sell it today you would earn a total of  966.00  from holding Chongqing Rural Commercial or generate 59.41% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	54.38%
Values	Daily Returns

Chongqing Rural Commercial  vs.  Aquestive Therapeutics

Chongqing Rural Comm

Risk-Adjusted Performance

8 of 100

OK

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

Aquestive Therapeutics

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Chongqing Rural and Aquestive Therapeutics

The main advantage of trading using opposite Chongqing Rural and Aquestive Therapeutics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chongqing Rural 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 Chongqing Rural Commercial 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.

Check out your portfolio center.

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 Anywhere module to track or share privately all of your investments from the convenience of any device.