Correlation Between Filament Health and Aequus Pharmaceuticals

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

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

Diversification Opportunities for Filament Health and Aequus Pharmaceuticals

0.27

Correlation Coefficient

Filament Health  Aequus Pharmaceuticals

Modest diversification

The 3 months correlation between Filament and Aequus is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding Filament Health Corp and Aequus Pharmaceuticals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aequus Pharmaceuticals and Filament Health 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 Filament Health Corp 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 Filament Health i.e., Filament Health and Aequus Pharmaceuticals go up and down completely randomly.

Pair Corralation between Filament Health and Aequus Pharmaceuticals

Assuming the 90 days horizon Filament Health Corp is expected to generate 2.0 times more return on investment than Aequus Pharmaceuticals. However, Filament Health is 2.0 times more volatile than Aequus Pharmaceuticals. It trades about 0.04 of its potential returns per unit of risk. Aequus Pharmaceuticals is currently generating about -0.09 per unit of risk. If you would invest  4.35  in Filament Health Corp on September 15, 2024 and sell it today you would lose (1.89) from holding Filament Health Corp or give up 43.45% of portfolio value over 90 days.

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

Filament Health Corp  vs.  Aequus Pharmaceuticals

Filament Health Corp

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Filament Health Corp are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile essential indicators, Filament Health reported solid returns over the last few months and may actually be approaching a breakup point.

Aequus Pharmaceuticals

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Aequus Pharmaceuticals has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Filament Health and Aequus Pharmaceuticals

The main advantage of trading using opposite Filament Health and Aequus Pharmaceuticals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Filament Health 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 Filament Health Corp 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.