Correlation Between Prenetics Global and Aclaris Therapeutics

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

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

Diversification Opportunities for Prenetics Global and Aclaris Therapeutics

-0.68

Correlation Coefficient

Prenetics Global  Aclaris Therapeutics

Excellent diversification

The 3 months correlation between Prenetics and Aclaris is -0.68. Overlapping area represents the amount of risk that can be diversified away by holding Prenetics Global and Aclaris Therapeutics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aclaris Therapeutics and Prenetics Global 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 Prenetics Global are associated (or correlated) with Aclaris Therapeutics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aclaris Therapeutics has no effect on the direction of Prenetics Global i.e., Prenetics Global and Aclaris Therapeutics go up and down completely randomly.

Pair Corralation between Prenetics Global and Aclaris Therapeutics

Considering the 90-day investment horizon Prenetics Global is expected to generate 1.09 times more return on investment than Aclaris Therapeutics. However, Prenetics Global is 1.09 times more volatile than Aclaris Therapeutics. It trades about 0.08 of its potential returns per unit of risk. Aclaris Therapeutics is currently generating about -0.28 per unit of risk. If you would invest  448.00  in Prenetics Global on November 28, 2024 and sell it today you would earn a total of  66.00  from holding Prenetics Global or generate 14.73% return on investment over 90 days.

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

Prenetics Global  vs.  Aclaris Therapeutics

Prenetics Global

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Prenetics Global are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of rather fragile basic indicators, Prenetics Global exhibited solid returns over the last few months and may actually be approaching a breakup point.

Aclaris Therapeutics

Risk-Adjusted Performance

Very Weak

Over the last 90 days Aclaris Therapeutics has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fragile performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in March 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Prenetics Global and Aclaris Therapeutics

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

The idea behind Prenetics Global and Aclaris 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.