Correlation Between Sabre Insurance and Aquestive Therapeutics

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

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

Diversification Opportunities for Sabre Insurance and Aquestive Therapeutics

0.0

Correlation Coefficient

Sabre Insurance  Aquestive Therapeutics

Pay attention - limited upside

The 3 months correlation between Sabre and Aquestive is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Sabre Insurance Group and Aquestive Therapeutics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aquestive Therapeutics and Sabre Insurance 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 Sabre Insurance Group 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 Sabre Insurance i.e., Sabre Insurance and Aquestive Therapeutics go up and down completely randomly.

Pair Corralation between Sabre Insurance and Aquestive Therapeutics

Assuming the 90 days horizon Sabre Insurance Group is expected to under-perform the Aquestive Therapeutics. But the pink sheet apears to be less risky and, when comparing its historical volatility, Sabre Insurance Group is 1.98 times less risky than Aquestive Therapeutics. The pink sheet trades about -0.03 of its potential returns per unit of risk. The Aquestive Therapeutics is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  90.00  in Aquestive Therapeutics on September 24, 2024 and sell it today you would earn a total of  269.00  from holding Aquestive Therapeutics or generate 298.89% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	99.8%
Values	Daily Returns

Sabre Insurance Group  vs.  Aquestive Therapeutics

Sabre Insurance Group

Risk-Adjusted Performance

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Very Weak

Over the last 90 days Sabre Insurance Group has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong technical and fundamental indicators, Sabre Insurance is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Aquestive Therapeutics

Risk-Adjusted Performance

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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 conflicting 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 Sabre Insurance and Aquestive Therapeutics

The main advantage of trading using opposite Sabre Insurance and Aquestive Therapeutics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sabre Insurance 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 Sabre Insurance Group 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.