Correlation Between Pharmacielo and Aion Therapeutic

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

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

Diversification Opportunities for Pharmacielo and Aion Therapeutic

-0.15

Correlation Coefficient

Pharmacielo  Aion Therapeutic

Good diversification

The 3 months correlation between Pharmacielo and Aion is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding Pharmacielo and Aion Therapeutic in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aion Therapeutic and Pharmacielo 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 Pharmacielo 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 Pharmacielo i.e., Pharmacielo and Aion Therapeutic go up and down completely randomly.

Pair Corralation between Pharmacielo and Aion Therapeutic

Assuming the 90 days horizon Pharmacielo is expected to generate 13.96 times less return on investment than Aion Therapeutic. But when comparing it to its historical volatility, Pharmacielo is 4.05 times less risky than Aion Therapeutic. It trades about 0.03 of its potential returns per unit of risk. Aion Therapeutic is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  0.52  in Aion Therapeutic on October 9, 2024 and sell it today you would earn a total of  1.02  from holding Aion Therapeutic or generate 196.15% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	99.61%
Values	Daily Returns

Pharmacielo  vs.  Aion Therapeutic

Pharmacielo

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Pharmacielo has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Aion Therapeutic

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Aion Therapeutic are ranked lower than 13 (%) 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 Pharmacielo and Aion Therapeutic

The main advantage of trading using opposite Pharmacielo and Aion Therapeutic positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pharmacielo 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 Pharmacielo 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..