Correlation Between Profound Medical and Aptose Biosciences

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

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

Diversification Opportunities for Profound Medical and Aptose Biosciences

-0.14

Correlation Coefficient

Profound Medical  Aptose Biosciences

Good diversification

The 3 months correlation between Profound and Aptose is -0.14. Overlapping area represents the amount of risk that can be diversified away by holding Profound Medical Corp and Aptose Biosciences in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aptose Biosciences and Profound Medical 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 Profound Medical Corp are associated (or correlated) with Aptose Biosciences. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aptose Biosciences has no effect on the direction of Profound Medical i.e., Profound Medical and Aptose Biosciences go up and down completely randomly.

Pair Corralation between Profound Medical and Aptose Biosciences

Assuming the 90 days trading horizon Profound Medical Corp is expected to under-perform the Aptose Biosciences. But the stock apears to be less risky and, when comparing its historical volatility, Profound Medical Corp is 41.12 times less risky than Aptose Biosciences. The stock trades about -0.06 of its potential returns per unit of risk. The Aptose Biosciences is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest  36.00  in Aptose Biosciences on December 30, 2024 and sell it today you would earn a total of  445.00  from holding Aptose Biosciences or generate 1236.11% return on investment over 90 days.

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

Profound Medical Corp  vs.  Aptose Biosciences

Profound Medical Corp

Risk-Adjusted Performance

Very Weak

Over the last 90 days Profound Medical Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unfluctuating performance, the Stock's basic indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Aptose Biosciences

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Aptose Biosciences are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Aptose Biosciences displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Profound Medical and Aptose Biosciences

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

The idea behind Profound Medical Corp and Aptose Biosciences 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.