Correlation Between Health Sciences and Aileron Therapeutics

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

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

Diversification Opportunities for Health Sciences and Aileron Therapeutics

0.0

Correlation Coefficient

Health Sciences  Aileron Therapeutics

Pay attention - limited upside

The 3 months correlation between Health and Aileron is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Health Sciences Gr and Aileron Therapeutics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aileron Therapeutics and Health Sciences 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 Health Sciences Gr are associated (or correlated) with Aileron Therapeutics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aileron Therapeutics has no effect on the direction of Health Sciences i.e., Health Sciences and Aileron Therapeutics go up and down completely randomly.

Pair Corralation between Health Sciences and Aileron Therapeutics

If you would invest  0.00  in Health Sciences Gr on September 13, 2024 and sell it today you would earn a total of  0.00  from holding Health Sciences Gr or generate 0.0% return on investment over 90 days.

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

Health Sciences Gr  vs.  Aileron Therapeutics

Health Sciences Gr

Risk-Adjusted Performance

0 of 100

Very Weak

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

Aileron Therapeutics

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Aileron Therapeutics has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of inconsistent performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in January 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with Health Sciences and Aileron Therapeutics

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

The idea behind Health Sciences Gr and Aileron 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.