Correlation Between High Coast and AlzeCure Pharma

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

By analyzing existing cross correlation between High Coast Distillery and AlzeCure Pharma, you can compare the effects of market volatilities on High Coast and AlzeCure Pharma 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 High Coast with a short position of AlzeCure Pharma. Check out your portfolio center. Please also check ongoing floating volatility patterns of High Coast and AlzeCure Pharma.

Diversification Opportunities for High Coast and AlzeCure Pharma

-0.69

Correlation Coefficient

High Coast  AlzeCure Pharma

Excellent diversification

The 3 months correlation between High and AlzeCure is -0.69. Overlapping area represents the amount of risk that can be diversified away by holding High Coast Distillery and AlzeCure Pharma in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AlzeCure Pharma and High Coast 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 High Coast Distillery are associated (or correlated) with AlzeCure Pharma. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AlzeCure Pharma has no effect on the direction of High Coast i.e., High Coast and AlzeCure Pharma go up and down completely randomly.

Pair Corralation between High Coast and AlzeCure Pharma

Assuming the 90 days trading horizon High Coast is expected to generate 10.73 times less return on investment than AlzeCure Pharma. But when comparing it to its historical volatility, High Coast Distillery is 1.2 times less risky than AlzeCure Pharma. It trades about 0.03 of its potential returns per unit of risk. AlzeCure Pharma is currently generating about 0.31 of returns per unit of risk over similar time horizon. If you would invest  120.00  in AlzeCure Pharma on October 10, 2024 and sell it today you would earn a total of  32.00  from holding AlzeCure Pharma or generate 26.67% return on investment over 90 days.

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

High Coast Distillery  vs.  AlzeCure Pharma

High Coast Distillery

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in High Coast Distillery are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat uncertain fundamental indicators, High Coast may actually be approaching a critical reversion point that can send shares even higher in February 2025.

AlzeCure Pharma

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days AlzeCure Pharma has generated negative risk-adjusted returns adding no value to investors with long positions. Despite uncertain performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with High Coast and AlzeCure Pharma

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

The idea behind High Coast Distillery and AlzeCure Pharma 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.