Correlation Between Adagene and Rezolute

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

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

Diversification Opportunities for Adagene and Rezolute

0.46

Correlation Coefficient

Adagene  Rezolute

Very weak diversification

The 3 months correlation between Adagene and Rezolute is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding Adagene and Rezolute in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rezolute and Adagene 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 Adagene are associated (or correlated) with Rezolute. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rezolute has no effect on the direction of Adagene i.e., Adagene and Rezolute go up and down completely randomly.

Pair Corralation between Adagene and Rezolute

Given the investment horizon of 90 days Adagene is expected to under-perform the Rezolute. In addition to that, Adagene is 1.44 times more volatile than Rezolute. It trades about -0.03 of its total potential returns per unit of risk. Rezolute is currently generating about 0.05 per unit of volatility. If you would invest  470.00  in Rezolute on September 2, 2024 and sell it today you would earn a total of  34.00  from holding Rezolute or generate 7.23% return on investment over 90 days.

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

Adagene  vs.  Rezolute

Adagene

Risk-Adjusted Performance

0 of 100

Very Weak

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

Rezolute

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Rezolute are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak essential indicators, Rezolute may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Adagene and Rezolute

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

The idea behind Adagene and Rezolute 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 CEOs Directory module to screen CEOs from public companies around the world.