Correlation Between Emmaus Life and Adagene

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

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

Diversification Opportunities for Emmaus Life and Adagene

0.37

Correlation Coefficient

Emmaus Life  Adagene

Weak diversification

The 3 months correlation between Emmaus and Adagene is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding Emmaus Life Sciences and Adagene in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Adagene and Emmaus Life 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 Emmaus Life Sciences are associated (or correlated) with Adagene. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Adagene has no effect on the direction of Emmaus Life i.e., Emmaus Life and Adagene go up and down completely randomly.

Pair Corralation between Emmaus Life and Adagene

If you would invest  26.00  in Emmaus Life Sciences on October 6, 2024 and sell it today you would earn a total of  0.00  from holding Emmaus Life Sciences or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	5.0%
Values	Daily Returns

Emmaus Life Sciences  vs.  Adagene

Emmaus Life Sciences

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Emmaus Life Sciences has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong primary indicators, Emmaus Life is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Adagene

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Adagene has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Adagene is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Emmaus Life and Adagene

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

The idea behind Emmaus Life Sciences and Adagene 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.