Correlation Between Jaguar Animal and Adial Pharmaceuticals

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

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

Diversification Opportunities for Jaguar Animal and Adial Pharmaceuticals

-0.44

Correlation Coefficient

Jaguar Animal  Adial Pharmaceuticals

Very good diversification

The 3 months correlation between Jaguar and Adial is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding Jaguar Animal Health and Adial Pharmaceuticals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Adial Pharmaceuticals and Jaguar Animal 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 Jaguar Animal Health are associated (or correlated) with Adial Pharmaceuticals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Adial Pharmaceuticals has no effect on the direction of Jaguar Animal i.e., Jaguar Animal and Adial Pharmaceuticals go up and down completely randomly.

Pair Corralation between Jaguar Animal and Adial Pharmaceuticals

Given the investment horizon of 90 days Jaguar Animal Health is expected to under-perform the Adial Pharmaceuticals. But the stock apears to be less risky and, when comparing its historical volatility, Jaguar Animal Health is 1.05 times less risky than Adial Pharmaceuticals. The stock trades about -0.07 of its potential returns per unit of risk. The Adial Pharmaceuticals is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  550.00  in Adial Pharmaceuticals on September 18, 2024 and sell it today you would lose (441.00) from holding Adial Pharmaceuticals or give up 80.18% of portfolio value over 90 days.

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

Jaguar Animal Health  vs.  Adial Pharmaceuticals

Jaguar Animal Health

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Jaguar Animal Health has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong technical and fundamental indicators, Jaguar Animal is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Adial Pharmaceuticals

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Adial Pharmaceuticals are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent forward indicators, Adial Pharmaceuticals is not utilizing all of its potentials. The newest stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Jaguar Animal and Adial Pharmaceuticals

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

The idea behind Jaguar Animal Health and Adial Pharmaceuticals 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.