Correlation Between Aeterna Zentaris and Acasti Pharma

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

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

Diversification Opportunities for Aeterna Zentaris and Acasti Pharma

-0.35

Correlation Coefficient

Aeterna Zentaris  Acasti Pharma

Very good diversification

The 3 months correlation between Aeterna and Acasti is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding Aeterna Zentaris and Acasti Pharma in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Acasti Pharma and Aeterna Zentaris 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 Aeterna Zentaris are associated (or correlated) with Acasti Pharma. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Acasti Pharma has no effect on the direction of Aeterna Zentaris i.e., Aeterna Zentaris and Acasti Pharma go up and down completely randomly.

Pair Corralation between Aeterna Zentaris and Acasti Pharma

Given the investment horizon of 90 days Aeterna Zentaris is expected to under-perform the Acasti Pharma. But the stock apears to be less risky and, when comparing its historical volatility, Aeterna Zentaris is 1.01 times less risky than Acasti Pharma. The stock trades about -0.02 of its potential returns per unit of risk. The Acasti Pharma is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  282.00  in Acasti Pharma on September 30, 2024 and sell it today you would earn a total of  55.00  from holding Acasti Pharma or generate 19.5% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	83.64%
Values	Daily Returns

Aeterna Zentaris  vs.  Acasti Pharma

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.

Acasti Pharma

Risk-Adjusted Performance

0 of 100

Good

Over the last 90 days Acasti Pharma has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively weak basic indicators, Acasti Pharma unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Aeterna Zentaris and Acasti Pharma

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

The idea behind Aeterna Zentaris and Acasti Pharma 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.