Correlation Between Vg Life and Adagene

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

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

Diversification Opportunities for Vg Life and Adagene

0.03

Correlation Coefficient

Vg Life  Adagene

Significant diversification

The 3 months correlation between VGLS and Adagene is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding Vg Life Sciences and Adagene in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Adagene and Vg Life 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 Vg Life Sciences are associated (or correlated) with Adagene. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Adagene has no effect on the direction of Vg Life i.e., Vg Life and Adagene go up and down completely randomly.

Pair Corralation between Vg Life and Adagene

Given the investment horizon of 90 days Vg Life Sciences is expected to generate 50.22 times more return on investment than Adagene. However, Vg Life is 50.22 times more volatile than Adagene. It trades about 0.33 of its potential returns per unit of risk. Adagene is currently generating about 0.06 per unit of risk. If you would invest  0.01  in Vg Life Sciences on September 12, 2024 and sell it today you would earn a total of  0.00  from holding Vg Life Sciences or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	99.6%
Values	Daily Returns

Vg Life Sciences  vs.  Adagene

Vg Life Sciences

Risk-Adjusted Performance

20 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Vg Life Sciences are ranked lower than 20 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile essential indicators, Vg Life unveiled solid returns over the last few months and may actually be approaching a breakup point.

Adagene

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Adagene has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Adagene is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Vg Life and Adagene

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

The idea behind Vg Life Sciences and Adagene 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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.