Correlation Between Incyte and Aptorum Group

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

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

Diversification Opportunities for Incyte and Aptorum Group

-0.36

Correlation Coefficient

Incyte  Aptorum Group

Very good diversification

The 3 months correlation between Incyte and Aptorum is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding Incyte and Aptorum Group Ltd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aptorum Group and Incyte 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 Incyte are associated (or correlated) with Aptorum Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aptorum Group has no effect on the direction of Incyte i.e., Incyte and Aptorum Group go up and down completely randomly.

Pair Corralation between Incyte and Aptorum Group

Given the investment horizon of 90 days Incyte is expected to under-perform the Aptorum Group. But the stock apears to be less risky and, when comparing its historical volatility, Incyte is 8.92 times less risky than Aptorum Group. The stock trades about -0.1 of its potential returns per unit of risk. The Aptorum Group Ltd is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest  136.00  in Aptorum Group Ltd on October 6, 2024 and sell it today you would earn a total of  78.00  from holding Aptorum Group Ltd or generate 57.35% return on investment over 90 days.

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

Incyte  vs.  Aptorum Group Ltd

Incyte

Risk-Adjusted Performance

3 of 100

Insignificant

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

Aptorum Group

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Aptorum Group Ltd are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of very weak basic indicators, Aptorum Group displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Incyte and Aptorum Group

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

The idea behind Incyte and Aptorum Group Ltd 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.