Correlation Between Aquestive Therapeutics and Awilco Drilling

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

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

Diversification Opportunities for Aquestive Therapeutics and Awilco Drilling

0.69

Correlation Coefficient

Aquestive Therapeutics  Awilco Drilling

Poor diversification

The 3 months correlation between Aquestive and Awilco is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Aquestive Therapeutics and Awilco Drilling PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Awilco Drilling PLC and Aquestive 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 Aquestive Therapeutics are associated (or correlated) with Awilco Drilling. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Awilco Drilling PLC has no effect on the direction of Aquestive Therapeutics i.e., Aquestive Therapeutics and Awilco Drilling go up and down completely randomly.

Pair Corralation between Aquestive Therapeutics and Awilco Drilling

Given the investment horizon of 90 days Aquestive Therapeutics is expected to generate 5.94 times less return on investment than Awilco Drilling. But when comparing it to its historical volatility, Aquestive Therapeutics is 9.16 times less risky than Awilco Drilling. It trades about 0.08 of its potential returns per unit of risk. Awilco Drilling PLC is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  1,000.00  in Awilco Drilling PLC on September 28, 2024 and sell it today you would lose (819.00) from holding Awilco Drilling PLC or give up 81.9% of portfolio value over 90 days.

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

Aquestive Therapeutics  vs.  Awilco Drilling PLC

Aquestive Therapeutics

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Aquestive Therapeutics has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Awilco Drilling PLC

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Awilco Drilling PLC has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable fundamental indicators, Awilco Drilling is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Aquestive Therapeutics and Awilco Drilling

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

The idea behind Aquestive Therapeutics and Awilco Drilling PLC 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..