Correlation Between Perceptive Capital and Antero Midstream

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

By analyzing existing cross correlation between Perceptive Capital Solutions and Antero Midstream Partners, you can compare the effects of market volatilities on Perceptive Capital and Antero Midstream 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 Perceptive Capital with a short position of Antero Midstream. Check out your portfolio center. Please also check ongoing floating volatility patterns of Perceptive Capital and Antero Midstream.

Diversification Opportunities for Perceptive Capital and Antero Midstream

0.02

Correlation Coefficient

Perceptive Capital  Antero Midstream

Significant diversification

The 3 months correlation between Perceptive and Antero is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding Perceptive Capital Solutions and Antero Midstream Partners in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Antero Midstream Partners and Perceptive Capital 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 Perceptive Capital Solutions are associated (or correlated) with Antero Midstream. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Antero Midstream Partners has no effect on the direction of Perceptive Capital i.e., Perceptive Capital and Antero Midstream go up and down completely randomly.

Pair Corralation between Perceptive Capital and Antero Midstream

Given the investment horizon of 90 days Perceptive Capital is expected to generate 8.63 times less return on investment than Antero Midstream. But when comparing it to its historical volatility, Perceptive Capital Solutions is 7.63 times less risky than Antero Midstream. It trades about 0.12 of its potential returns per unit of risk. Antero Midstream Partners is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest  1,502  in Antero Midstream Partners on October 11, 2024 and sell it today you would earn a total of  62.00  from holding Antero Midstream Partners or generate 4.13% return on investment over 90 days.

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

Perceptive Capital Solutions  vs.  Antero Midstream Partners

Perceptive Capital

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Perceptive Capital Solutions are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound basic indicators, Perceptive Capital is not utilizing all of its potentials. The recent stock price tumult, may contribute to shorter-term losses for the shareholders.

Antero Midstream Partners

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Antero Midstream Partners are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy primary indicators, Antero Midstream is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Perceptive Capital and Antero Midstream

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

The idea behind Perceptive Capital Solutions and Antero Midstream Partners 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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.