Correlation Between Royal Helium and Aptose Biosciences

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

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

Diversification Opportunities for Royal Helium and Aptose Biosciences

0.73

Correlation Coefficient

Royal Helium  Aptose Biosciences

Poor diversification

The 3 months correlation between Royal and Aptose is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Royal Helium and Aptose Biosciences in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aptose Biosciences and Royal Helium 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 Royal Helium 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 Royal Helium i.e., Royal Helium and Aptose Biosciences go up and down completely randomly.

Pair Corralation between Royal Helium and Aptose Biosciences

Assuming the 90 days horizon Royal Helium is expected to generate 1.07 times more return on investment than Aptose Biosciences. However, Royal Helium is 1.07 times more volatile than Aptose Biosciences. It trades about -0.07 of its potential returns per unit of risk. Aptose Biosciences is currently generating about -0.07 per unit of risk. If you would invest  32.00  in Royal Helium on September 24, 2024 and sell it today you would lose (29.50) from holding Royal Helium or give up 92.19% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.58%
Values	Daily Returns

Royal Helium  vs.  Aptose Biosciences

Royal Helium

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Royal Helium has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of abnormal performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in January 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Aptose Biosciences

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Aptose Biosciences has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very unfluctuating basic indicators, Aptose Biosciences may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Royal Helium and Aptose Biosciences

The main advantage of trading using opposite Royal Helium and Aptose Biosciences positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Royal Helium 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 Royal Helium 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.

Check out your portfolio center.

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 Transaction History module to view history of all your transactions and understand their impact on performance.