Correlation Between Exscientia and AptarGroup

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

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

Diversification Opportunities for Exscientia and AptarGroup

-0.54

Correlation Coefficient

Exscientia  AptarGroup

Excellent diversification

The 3 months correlation between Exscientia and AptarGroup is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding Exscientia Ltd ADR and AptarGroup in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AptarGroup and Exscientia 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 Exscientia Ltd ADR are associated (or correlated) with AptarGroup. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AptarGroup has no effect on the direction of Exscientia i.e., Exscientia and AptarGroup go up and down completely randomly.

Pair Corralation between Exscientia and AptarGroup

Given the investment horizon of 90 days Exscientia Ltd ADR is expected to generate 5.18 times more return on investment than AptarGroup. However, Exscientia is 5.18 times more volatile than AptarGroup. It trades about 0.02 of its potential returns per unit of risk. AptarGroup is currently generating about 0.07 per unit of risk. If you would invest  601.00  in Exscientia Ltd ADR on September 29, 2024 and sell it today you would lose (117.00) from holding Exscientia Ltd ADR or give up 19.47% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	95.16%
Values	Daily Returns

Exscientia Ltd ADR  vs.  AptarGroup

Exscientia ADR

Risk-Adjusted Performance

0 of 100

Weak

Over the last 90 days Exscientia Ltd ADR has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong basic indicators, Exscientia is not utilizing all of its potentials. The newest stock price confusion, may contribute to short-horizon losses for the traders.

AptarGroup

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days AptarGroup has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, AptarGroup is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Exscientia and AptarGroup

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

The idea behind Exscientia Ltd ADR and AptarGroup 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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.