Correlation Between Xtant Medical and Aquestive Therapeutics

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

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

Diversification Opportunities for Xtant Medical and Aquestive Therapeutics

0.62

Correlation Coefficient

Xtant Medical  Aquestive Therapeutics

Poor diversification

The 3 months correlation between Xtant and Aquestive is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Xtant Medical Holdings and Aquestive Therapeutics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aquestive Therapeutics and Xtant Medical 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 Xtant Medical Holdings 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 Xtant Medical i.e., Xtant Medical and Aquestive Therapeutics go up and down completely randomly.

Pair Corralation between Xtant Medical and Aquestive Therapeutics

Given the investment horizon of 90 days Xtant Medical Holdings is expected to generate 1.01 times more return on investment than Aquestive Therapeutics. However, Xtant Medical is 1.01 times more volatile than Aquestive Therapeutics. It trades about 0.13 of its potential returns per unit of risk. Aquestive Therapeutics is currently generating about -0.25 per unit of risk. If you would invest  40.00  in Xtant Medical Holdings on October 4, 2024 and sell it today you would earn a total of  4.00  from holding Xtant Medical Holdings or generate 10.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	95.45%
Values	Daily Returns

Xtant Medical Holdings  vs.  Aquestive Therapeutics

Xtant Medical Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

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

Aquestive Therapeutics

Risk-Adjusted Performance

0 of 100

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 February 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Xtant Medical and Aquestive Therapeutics

The main advantage of trading using opposite Xtant Medical and Aquestive Therapeutics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Xtant Medical 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 Xtant Medical Holdings 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.