Correlation Between Aeterna Zentaris and Adamis Pharma

Can any of the company-specific risk be diversified away by investing in both Aeterna Zentaris and Adamis 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 Adamis 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 Adamis Pharma, you can compare the effects of market volatilities on Aeterna Zentaris and Adamis 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 Adamis Pharma. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aeterna Zentaris and Adamis Pharma.

Diversification Opportunities for Aeterna Zentaris and Adamis Pharma

0.87

Correlation Coefficient

Aeterna Zentaris  Adamis Pharma

Very poor diversification

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

Pair Corralation between Aeterna Zentaris and Adamis Pharma

Given the investment horizon of 90 days Aeterna Zentaris is expected to generate 1.09 times more return on investment than Adamis Pharma. However, Aeterna Zentaris is 1.09 times more volatile than Adamis Pharma. It trades about -0.02 of its potential returns per unit of risk. Adamis Pharma is currently generating about -0.42 per unit of risk. 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

Aeterna Zentaris  vs.  Adamis 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.

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.

Pair Trading with Aeterna Zentaris and Adamis Pharma

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

The idea behind Aeterna Zentaris and Adamis 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.