Correlation Between Acer Therapeutics and Lexaria Bioscience

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

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

Diversification Opportunities for Acer Therapeutics and Lexaria Bioscience

-0.29

Correlation Coefficient

Acer Therapeutics  Lexaria Bioscience

Very good diversification

The 3 months correlation between Acer and Lexaria is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding Acer Therapeutics and Lexaria Bioscience Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lexaria Bioscience Corp and Acer 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 Acer Therapeutics are associated (or correlated) with Lexaria Bioscience. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lexaria Bioscience Corp has no effect on the direction of Acer Therapeutics i.e., Acer Therapeutics and Lexaria Bioscience go up and down completely randomly.

Pair Corralation between Acer Therapeutics and Lexaria Bioscience

If you would invest  84.00  in Acer Therapeutics on September 30, 2024 and sell it today you would earn a total of  0.00  from holding Acer Therapeutics or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	1.56%
Values	Daily Returns

Acer Therapeutics  vs.  Lexaria Bioscience Corp

Acer Therapeutics

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Acer Therapeutics has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable technical and fundamental indicators, Acer Therapeutics is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Lexaria Bioscience Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Lexaria Bioscience Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain fairly 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.

Pair Trading with Acer Therapeutics and Lexaria Bioscience

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

The idea behind Acer Therapeutics and Lexaria Bioscience Corp 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 Transaction History module to view history of all your transactions and understand their impact on performance.