Correlation Between Regeneron Pharmaceuticals and Aquestive Therapeutics

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

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

Diversification Opportunities for Regeneron Pharmaceuticals and Aquestive Therapeutics

0.57

Correlation Coefficient

Regeneron Pharmaceuticals  Aquestive Therapeutics

Very weak diversification

The 3 months correlation between Regeneron and Aquestive is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding Regeneron Pharmaceuticals and Aquestive Therapeutics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aquestive Therapeutics and Regeneron Pharmaceuticals 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 Regeneron Pharmaceuticals 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 Regeneron Pharmaceuticals i.e., Regeneron Pharmaceuticals and Aquestive Therapeutics go up and down completely randomly.

Pair Corralation between Regeneron Pharmaceuticals and Aquestive Therapeutics

Given the investment horizon of 90 days Regeneron Pharmaceuticals is expected to under-perform the Aquestive Therapeutics. But the stock apears to be less risky and, when comparing its historical volatility, Regeneron Pharmaceuticals is 2.29 times less risky than Aquestive Therapeutics. The stock trades about -0.34 of its potential returns per unit of risk. The Aquestive Therapeutics is currently generating about -0.12 of returns per unit of risk over similar time horizon. If you would invest  498.00  in Aquestive Therapeutics on September 30, 2024 and sell it today you would lose (146.00) from holding Aquestive Therapeutics or give up 29.32% of portfolio value over 90 days.

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

Regeneron Pharmaceuticals  vs.  Aquestive Therapeutics

Regeneron Pharmaceuticals

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Regeneron Pharmaceuticals has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's technical and fundamental indicators remain very healthy which may send shares a bit higher in January 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Aquestive Therapeutics

Risk-Adjusted Performance

0 of 100

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 unsteady performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Regeneron Pharmaceuticals and Aquestive Therapeutics

The main advantage of trading using opposite Regeneron Pharmaceuticals and Aquestive Therapeutics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Regeneron Pharmaceuticals 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 Regeneron Pharmaceuticals 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.