Correlation Between Aion Therapeutic and Bionoid Pharma

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

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

Diversification Opportunities for Aion Therapeutic and Bionoid Pharma

0.09

Correlation Coefficient

Aion Therapeutic  Bionoid Pharma

Significant diversification

The 3 months correlation between Aion and Bionoid is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding Aion Therapeutic and Bionoid Pharma in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bionoid Pharma and Aion Therapeutic 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 Aion Therapeutic are associated (or correlated) with Bionoid Pharma. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bionoid Pharma has no effect on the direction of Aion Therapeutic i.e., Aion Therapeutic and Bionoid Pharma go up and down completely randomly.

Pair Corralation between Aion Therapeutic and Bionoid Pharma

Assuming the 90 days horizon Aion Therapeutic is expected to generate 3.29 times more return on investment than Bionoid Pharma. However, Aion Therapeutic is 3.29 times more volatile than Bionoid Pharma. It trades about 0.16 of its potential returns per unit of risk. Bionoid Pharma is currently generating about 0.11 per unit of risk. If you would invest  0.68  in Aion Therapeutic on September 14, 2024 and sell it today you would lose (0.27) from holding Aion Therapeutic or give up 39.71% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.44%
Values	Daily Returns

Aion Therapeutic  vs.  Bionoid Pharma

Aion Therapeutic

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Aion Therapeutic are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile fundamental indicators, Aion Therapeutic reported solid returns over the last few months and may actually be approaching a breakup point.

Bionoid Pharma

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Bionoid Pharma are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Even with relatively fragile basic indicators, Bionoid Pharma reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Aion Therapeutic and Bionoid Pharma

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

The idea behind Aion Therapeutic and Bionoid 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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.