Correlation Between Aion Therapeutic and Target

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

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

Diversification Opportunities for Aion Therapeutic and Target

0.08

Correlation Coefficient

Aion Therapeutic  Target

Significant diversification

The 3 months correlation between Aion and Target is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding Aion Therapeutic and Target Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Target Group 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 Target. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Target Group has no effect on the direction of Aion Therapeutic i.e., Aion Therapeutic and Target go up and down completely randomly.

Pair Corralation between Aion Therapeutic and Target

Assuming the 90 days horizon Aion Therapeutic is expected to generate 1.75 times more return on investment than Target. However, Aion Therapeutic is 1.75 times more volatile than Target Group. It trades about 0.11 of its potential returns per unit of risk. Target Group is currently generating about 0.09 per unit of risk. If you would invest  0.52  in Aion Therapeutic on September 14, 2024 and sell it today you would lose (0.11) from holding Aion Therapeutic or give up 21.15% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	99.8%
Values	Daily Returns

Aion Therapeutic  vs.  Target Group

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.

Target Group

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Target Group are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of fairly fragile fundamental indicators, Target showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Aion Therapeutic and Target

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

The idea behind Aion Therapeutic and Target Group 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.