Correlation Between Aclaris Therapeutics and DarioHealth Corp

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

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

Diversification Opportunities for Aclaris Therapeutics and DarioHealth Corp

-0.55

Correlation Coefficient

Aclaris Therapeutics  DarioHealth Corp

Excellent diversification

The 3 months correlation between Aclaris and DarioHealth is -0.55. Overlapping area represents the amount of risk that can be diversified away by holding Aclaris Therapeutics and DarioHealth Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DarioHealth Corp and Aclaris 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 Aclaris Therapeutics are associated (or correlated) with DarioHealth Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DarioHealth Corp has no effect on the direction of Aclaris Therapeutics i.e., Aclaris Therapeutics and DarioHealth Corp go up and down completely randomly.

Pair Corralation between Aclaris Therapeutics and DarioHealth Corp

Given the investment horizon of 90 days Aclaris Therapeutics is expected to generate 1.97 times more return on investment than DarioHealth Corp. However, Aclaris Therapeutics is 1.97 times more volatile than DarioHealth Corp. It trades about 0.23 of its potential returns per unit of risk. DarioHealth Corp is currently generating about 0.01 per unit of risk. If you would invest  115.00  in Aclaris Therapeutics on September 2, 2024 and sell it today you would earn a total of  292.00  from holding Aclaris Therapeutics or generate 253.91% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Aclaris Therapeutics  vs.  DarioHealth Corp

Aclaris Therapeutics

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Aclaris Therapeutics are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, Aclaris Therapeutics unveiled solid returns over the last few months and may actually be approaching a breakup point.

DarioHealth Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days DarioHealth Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy forward indicators, DarioHealth Corp is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Aclaris Therapeutics and DarioHealth Corp

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

The idea behind Aclaris Therapeutics and DarioHealth 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.