Correlation Between FP Newspapers and Aquestive Therapeutics

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

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

Diversification Opportunities for FP Newspapers and Aquestive Therapeutics

-0.2

Correlation Coefficient

FP Newspapers  Aquestive Therapeutics

Good diversification

The 3 months correlation between FPNUF and Aquestive is -0.2. Overlapping area represents the amount of risk that can be diversified away by holding FP Newspapers and Aquestive Therapeutics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aquestive Therapeutics and FP Newspapers 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 FP Newspapers 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 FP Newspapers i.e., FP Newspapers and Aquestive Therapeutics go up and down completely randomly.

Pair Corralation between FP Newspapers and Aquestive Therapeutics

Assuming the 90 days horizon FP Newspapers is expected to generate 0.34 times more return on investment than Aquestive Therapeutics. However, FP Newspapers is 2.91 times less risky than Aquestive Therapeutics. It trades about 0.04 of its potential returns per unit of risk. Aquestive Therapeutics is currently generating about -0.01 per unit of risk. If you would invest  37.00  in FP Newspapers on December 27, 2024 and sell it today you would earn a total of  1.00  from holding FP Newspapers or generate 2.7% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

FP Newspapers  vs.  Aquestive Therapeutics

FP Newspapers

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in FP Newspapers are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, FP Newspapers is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Aquestive Therapeutics

Risk-Adjusted Performance

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 comparatively stable basic indicators, Aquestive Therapeutics is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with FP Newspapers and Aquestive Therapeutics

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

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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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..