Correlation Between AptaBio Therapeutics and HuMC

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

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

Diversification Opportunities for AptaBio Therapeutics and HuMC

0.8

Correlation Coefficient

AptaBio Therapeutics  HuMC

Very poor diversification

The 3 months correlation between AptaBio and HuMC is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding AptaBio Therapeutics and HuMC Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HuMC and AptaBio Therapeutics 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 AptaBio Therapeutics are associated (or correlated) with HuMC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HuMC has no effect on the direction of AptaBio Therapeutics i.e., AptaBio Therapeutics and HuMC go up and down completely randomly.

Pair Corralation between AptaBio Therapeutics and HuMC

Assuming the 90 days trading horizon AptaBio Therapeutics is expected to under-perform the HuMC. In addition to that, AptaBio Therapeutics is 1.97 times more volatile than HuMC Co. It trades about -0.08 of its total potential returns per unit of risk. HuMC Co is currently generating about -0.09 per unit of volatility. If you would invest  99,600  in HuMC Co on September 24, 2024 and sell it today you would lose (3,500) from holding HuMC Co or give up 3.51% of portfolio value over 90 days.

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

AptaBio Therapeutics  vs.  HuMC Co

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 January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

HuMC

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days HuMC Co has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with AptaBio Therapeutics and HuMC

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

The idea behind AptaBio Therapeutics and HuMC Co 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.