Correlation Between Link Reservations and Aion Therapeutic

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

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

Diversification Opportunities for Link Reservations and Aion Therapeutic

0.05

Correlation Coefficient

Link Reservations  Aion Therapeutic

Significant diversification

The 3 months correlation between Link and Aion is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding Link Reservations and Aion Therapeutic in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aion Therapeutic and Link Reservations 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 Link Reservations are associated (or correlated) with Aion Therapeutic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aion Therapeutic has no effect on the direction of Link Reservations i.e., Link Reservations and Aion Therapeutic go up and down completely randomly.

Pair Corralation between Link Reservations and Aion Therapeutic

Given the investment horizon of 90 days Link Reservations is expected to generate 13.01 times less return on investment than Aion Therapeutic. But when comparing it to its historical volatility, Link Reservations is 3.06 times less risky than Aion Therapeutic. It trades about 0.04 of its potential returns per unit of risk. Aion Therapeutic is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest  0.68  in Aion Therapeutic on September 13, 2024 and sell it today you would lose (0.27) from holding Aion Therapeutic or give up 39.71% of portfolio value over 90 days.

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

Link Reservations  vs.  Aion Therapeutic

Link Reservations

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Link Reservations are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Link Reservations showed solid returns over the last few months and may actually be approaching a breakup point.

Aion Therapeutic

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Aion Therapeutic are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak fundamental indicators, Aion Therapeutic reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Link Reservations and Aion Therapeutic

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

The idea behind Link Reservations and Aion Therapeutic 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.