Correlation Between National CineMedia and Aquestive Therapeutics

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

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

Diversification Opportunities for National CineMedia and Aquestive Therapeutics

0.36

Correlation Coefficient

National CineMedia  Aquestive Therapeutics

Weak diversification

The 3 months correlation between National and Aquestive is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding National CineMedia and Aquestive Therapeutics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aquestive Therapeutics and National CineMedia 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 National CineMedia 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 National CineMedia i.e., National CineMedia and Aquestive Therapeutics go up and down completely randomly.

Pair Corralation between National CineMedia and Aquestive Therapeutics

Given the investment horizon of 90 days National CineMedia is expected to under-perform the Aquestive Therapeutics. In addition to that, National CineMedia is 1.01 times more volatile than Aquestive Therapeutics. It trades about -0.13 of its total potential returns per unit of risk. Aquestive Therapeutics is currently generating about 0.09 per unit of volatility. If you would invest  280.00  in Aquestive Therapeutics on December 30, 2024 and sell it today you would earn a total of  22.00  from holding Aquestive Therapeutics or generate 7.86% return on investment over 90 days.

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

National CineMedia  vs.  Aquestive Therapeutics

National CineMedia

Risk-Adjusted Performance

Very Weak

Over the last 90 days National CineMedia has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's primary indicators remain strong and the recent confusion on Wall Street may also be a sign of long-lasting gains for the firm traders.

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 latest conflicting performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with National CineMedia and Aquestive Therapeutics

The main advantage of trading using opposite National CineMedia and Aquestive Therapeutics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if National CineMedia 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 National CineMedia 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.