Correlation Between Technology One and Acumen Pharmaceuticals

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

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

Diversification Opportunities for Technology One and Acumen Pharmaceuticals

0.34

Correlation Coefficient

Technology One  Acumen Pharmaceuticals

Weak diversification

The 3 months correlation between Technology and Acumen is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding Technology One Limited and Acumen Pharmaceuticals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Acumen Pharmaceuticals and Technology One 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 Technology One Limited are associated (or correlated) with Acumen Pharmaceuticals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Acumen Pharmaceuticals has no effect on the direction of Technology One i.e., Technology One and Acumen Pharmaceuticals go up and down completely randomly.

Pair Corralation between Technology One and Acumen Pharmaceuticals

Assuming the 90 days horizon Technology One Limited is expected to generate 0.4 times more return on investment than Acumen Pharmaceuticals. However, Technology One Limited is 2.49 times less risky than Acumen Pharmaceuticals. It trades about -0.12 of its potential returns per unit of risk. Acumen Pharmaceuticals is currently generating about -0.15 per unit of risk. If you would invest  1,970  in Technology One Limited on December 21, 2024 and sell it today you would lose (215.00) from holding Technology One Limited or give up 10.91% of portfolio value over 90 days.

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

Technology One Limited  vs.  Acumen Pharmaceuticals

Technology One

Risk-Adjusted Performance

Very Weak

Over the last 90 days Technology One Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest unfluctuating performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Acumen Pharmaceuticals

Risk-Adjusted Performance

Very Weak

Over the last 90 days Acumen Pharmaceuticals has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in April 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Technology One and Acumen Pharmaceuticals

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

The idea behind Technology One Limited and Acumen Pharmaceuticals 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.