Correlation Between Eagon Industrial and AptaBio Therapeutics

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

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

Diversification Opportunities for Eagon Industrial and AptaBio Therapeutics

0.6

Correlation Coefficient

Eagon Industrial  AptaBio Therapeutics

Poor diversification

The 3 months correlation between Eagon and AptaBio is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Eagon Industrial Co and AptaBio Therapeutics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AptaBio Therapeutics and Eagon Industrial 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 Eagon Industrial Co are associated (or correlated) with AptaBio Therapeutics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AptaBio Therapeutics has no effect on the direction of Eagon Industrial i.e., Eagon Industrial and AptaBio Therapeutics go up and down completely randomly.

Pair Corralation between Eagon Industrial and AptaBio Therapeutics

Assuming the 90 days trading horizon Eagon Industrial Co is expected to under-perform the AptaBio Therapeutics. But the stock apears to be less risky and, when comparing its historical volatility, Eagon Industrial Co is 2.98 times less risky than AptaBio Therapeutics. The stock trades about -0.08 of its potential returns per unit of risk. The AptaBio Therapeutics is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest  1,083,000  in AptaBio Therapeutics on September 1, 2024 and sell it today you would lose (431,000) from holding AptaBio Therapeutics or give up 39.8% of portfolio value over 90 days.

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

Eagon Industrial Co  vs.  AptaBio Therapeutics

Eagon Industrial

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Eagon Industrial Co has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Eagon Industrial is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

AptaBio Therapeutics

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days AptaBio Therapeutics has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in December 2024. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Eagon Industrial and AptaBio Therapeutics

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

The idea behind Eagon Industrial Co and AptaBio 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.