Correlation Between Mill City and Aquestive Therapeutics

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

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

Diversification Opportunities for Mill City and Aquestive Therapeutics

0.05

Correlation Coefficient

Mill City  Aquestive Therapeutics

Significant diversification

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

Pair Corralation between Mill City and Aquestive Therapeutics

Given the investment horizon of 90 days Mill City Ventures is expected to generate 1.89 times more return on investment than Aquestive Therapeutics. However, Mill City is 1.89 times more volatile than Aquestive Therapeutics. It trades about 0.0 of its potential returns per unit of risk. Aquestive Therapeutics is currently generating about -0.02 per unit of risk. If you would invest  195.00  in Mill City Ventures on December 29, 2024 and sell it today you would lose (29.00) from holding Mill City Ventures or give up 14.87% of portfolio value over 90 days.

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

Mill City Ventures  vs.  Aquestive Therapeutics

Mill City Ventures

Risk-Adjusted Performance

Very Weak

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

Aquestive Therapeutics

Risk-Adjusted Performance

Very Weak

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

Pair Trading with Mill City and Aquestive Therapeutics

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

The idea behind Mill City Ventures and Aquestive Therapeutics 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.