Correlation Between Iterum Therapeutics and Aqua Metals

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

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

Diversification Opportunities for Iterum Therapeutics and Aqua Metals

0.46

Correlation Coefficient

Iterum Therapeutics  Aqua Metals

Very weak diversification

The 3 months correlation between Iterum and Aqua is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding Iterum Therapeutics PLC and Aqua Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aqua Metals and Iterum 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 Iterum Therapeutics PLC are associated (or correlated) with Aqua Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aqua Metals has no effect on the direction of Iterum Therapeutics i.e., Iterum Therapeutics and Aqua Metals go up and down completely randomly.

Pair Corralation between Iterum Therapeutics and Aqua Metals

Given the investment horizon of 90 days Iterum Therapeutics PLC is expected to generate 0.97 times more return on investment than Aqua Metals. However, Iterum Therapeutics PLC is 1.03 times less risky than Aqua Metals. It trades about 0.02 of its potential returns per unit of risk. Aqua Metals is currently generating about -0.06 per unit of risk. If you would invest  162.00  in Iterum Therapeutics PLC on December 4, 2024 and sell it today you would lose (29.00) from holding Iterum Therapeutics PLC or give up 17.9% of portfolio value over 90 days.

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

Iterum Therapeutics PLC  vs.  Aqua Metals

Iterum Therapeutics PLC

Risk-Adjusted Performance

Very Weak

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

Aqua Metals

Risk-Adjusted Performance

Very Weak

Over the last 90 days Aqua Metals has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable primary indicators, Aqua Metals is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Iterum Therapeutics and Aqua Metals

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

The idea behind Iterum Therapeutics PLC and Aqua Metals 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.