Correlation Between HLS Therapeutics and Avicanna

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

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

Diversification Opportunities for HLS Therapeutics and Avicanna

0.1

Correlation Coefficient

HLS Therapeutics  Avicanna

Average diversification

The 3 months correlation between HLS and Avicanna is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding HLS Therapeutics and Avicanna in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Avicanna and HLS Therapeutics 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 HLS Therapeutics are associated (or correlated) with Avicanna. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Avicanna has no effect on the direction of HLS Therapeutics i.e., HLS Therapeutics and Avicanna go up and down completely randomly.

Pair Corralation between HLS Therapeutics and Avicanna

Assuming the 90 days horizon HLS Therapeutics is expected to generate 0.47 times more return on investment than Avicanna. However, HLS Therapeutics is 2.11 times less risky than Avicanna. It trades about 0.03 of its potential returns per unit of risk. Avicanna is currently generating about 0.01 per unit of risk. If you would invest  234.00  in HLS Therapeutics on September 13, 2024 and sell it today you would earn a total of  6.00  from holding HLS Therapeutics or generate 2.56% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.44%
Values	Daily Returns

HLS Therapeutics  vs.  Avicanna

HLS Therapeutics

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in HLS Therapeutics are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, HLS Therapeutics may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Avicanna

Risk-Adjusted Performance

0 of 100

Weak

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

Pair Trading with HLS Therapeutics and Avicanna

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

The idea behind HLS Therapeutics and Avicanna 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.

Check out your portfolio center.

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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.