Correlation Between Syneos Health and Aclaris Therapeutics

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

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

Diversification Opportunities for Syneos Health and Aclaris Therapeutics

0.58

Correlation Coefficient

Syneos Health  Aclaris Therapeutics

Very weak diversification

The 3 months correlation between Syneos and Aclaris is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding Syneos Health and Aclaris Therapeutics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aclaris Therapeutics and Syneos Health 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 Syneos Health 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 Syneos Health i.e., Syneos Health and Aclaris Therapeutics go up and down completely randomly.

Pair Corralation between Syneos Health and Aclaris Therapeutics

Given the investment horizon of 90 days Syneos Health is expected to under-perform the Aclaris Therapeutics. But the stock apears to be less risky and, when comparing its historical volatility, Syneos Health is 71.56 times less risky than Aclaris Therapeutics. The stock trades about -0.16 of its potential returns per unit of risk. The Aclaris Therapeutics is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  1,044  in Aclaris Therapeutics on September 12, 2024 and sell it today you would lose (681.00) from holding Aclaris Therapeutics or give up 65.23% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	1.14%
Values	Daily Returns

Syneos Health  vs.  Aclaris Therapeutics

Syneos Health

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Syneos Health has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong basic indicators, Syneos Health is not utilizing all of its potentials. The latest stock price confusion, may contribute to short-horizon losses for the traders.

Aclaris Therapeutics

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Aclaris Therapeutics are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile basic indicators, Aclaris Therapeutics unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Syneos Health and Aclaris Therapeutics

The main advantage of trading using opposite Syneos Health and Aclaris Therapeutics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Syneos Health 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 Syneos Health 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.