Correlation Between Adagene and Vg Life

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

By analyzing existing cross correlation between Adagene and Vg Life Sciences, you can compare the effects of market volatilities on Adagene and Vg Life 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 Vg Life. Check out your portfolio center. Please also check ongoing floating volatility patterns of Adagene and Vg Life.

Diversification Opportunities for Adagene and Vg Life

-0.15

Correlation Coefficient

Adagene  Vg Life

Good diversification

The 3 months correlation between Adagene and VGLS is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding Adagene and Vg Life Sciences in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vg Life Sciences 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 Vg Life. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vg Life Sciences has no effect on the direction of Adagene i.e., Adagene and Vg Life go up and down completely randomly.

Pair Corralation between Adagene and Vg Life

Given the investment horizon of 90 days Adagene is expected to under-perform the Vg Life. But the stock apears to be less risky and, when comparing its historical volatility, Adagene is 48.39 times less risky than Vg Life. The stock trades about -0.03 of its potential returns per unit of risk. The Vg Life Sciences is currently generating about 0.29 of returns per unit of risk over similar time horizon. If you would invest  0.00  in Vg Life Sciences on September 3, 2024 and sell it today you would earn a total of  0.01  from holding Vg Life Sciences or generate 9.223372036854776E16% return on investment over 90 days.

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

Adagene  vs.  Vg Life Sciences

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 unsteady 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.

Vg Life Sciences

Risk-Adjusted Performance

22 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Vg Life Sciences are ranked lower than 22 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile essential indicators, Vg Life unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Adagene and Vg Life

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

The idea behind Adagene and Vg Life Sciences 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.

Check out your portfolio center.

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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.