Correlation Between Adamis Pharma and Aeterna Zentaris

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

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

Diversification Opportunities for Adamis Pharma and Aeterna Zentaris

0.87

Correlation Coefficient

Adamis Pharma  Aeterna Zentaris

Very poor diversification

The 3 months correlation between Adamis and Aeterna is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Adamis Pharma and Aeterna Zentaris in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aeterna Zentaris and Adamis Pharma 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 Adamis Pharma are associated (or correlated) with Aeterna Zentaris. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aeterna Zentaris has no effect on the direction of Adamis Pharma i.e., Adamis Pharma and Aeterna Zentaris go up and down completely randomly.

Pair Corralation between Adamis Pharma and Aeterna Zentaris

Given the investment horizon of 90 days Adamis Pharma is expected to under-perform the Aeterna Zentaris. But the stock apears to be less risky and, when comparing its historical volatility, Adamis Pharma is 1.09 times less risky than Aeterna Zentaris. The stock trades about -0.42 of its potential returns per unit of risk. The Aeterna Zentaris is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest  1,108  in Aeterna Zentaris on September 30, 2024 and sell it today you would lose (494.00) from holding Aeterna Zentaris or give up 44.58% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	4.35%
Values	Daily Returns

Adamis Pharma  vs.  Aeterna Zentaris

Adamis Pharma

Risk-Adjusted Performance

0 of 100

Very Weak

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

Aeterna Zentaris

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Aeterna Zentaris has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Aeterna Zentaris is not utilizing all of its potentials. The recent stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Adamis Pharma and Aeterna Zentaris

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

The idea behind Adamis Pharma and Aeterna Zentaris 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.