Correlation Between Aileron Therapeutics and Wesana Health

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

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

Diversification Opportunities for Aileron Therapeutics and Wesana Health

-0.18

Correlation Coefficient

Aileron Therapeutics  Wesana Health

Good diversification

The 3 months correlation between Aileron and Wesana is -0.18. Overlapping area represents the amount of risk that can be diversified away by holding Aileron Therapeutics and Wesana Health Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wesana Health Holdings and Aileron Therapeutics 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 Aileron Therapeutics are associated (or correlated) with Wesana Health. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wesana Health Holdings has no effect on the direction of Aileron Therapeutics i.e., Aileron Therapeutics and Wesana Health go up and down completely randomly.

Pair Corralation between Aileron Therapeutics and Wesana Health

Given the investment horizon of 90 days Aileron Therapeutics is expected to under-perform the Wesana Health. But the stock apears to be less risky and, when comparing its historical volatility, Aileron Therapeutics is 6.56 times less risky than Wesana Health. The stock trades about -0.02 of its potential returns per unit of risk. The Wesana Health Holdings is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest  0.56  in Wesana Health Holdings on September 15, 2024 and sell it today you would earn a total of  0.04  from holding Wesana Health Holdings or generate 7.14% return on investment over 90 days.

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

Aileron Therapeutics  vs.  Wesana Health Holdings

Aileron Therapeutics

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Aileron Therapeutics has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest inconsistent performance, the Stock's basic indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Wesana Health Holdings

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Wesana Health Holdings are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak basic indicators, Wesana Health reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Aileron Therapeutics and Wesana Health

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

The idea behind Aileron Therapeutics and Wesana Health Holdings 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.