Correlation Between Aquestive Therapeutics and Painreform

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

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

Diversification Opportunities for Aquestive Therapeutics and Painreform

-0.31

Correlation Coefficient

Aquestive Therapeutics  Painreform

Very good diversification

The 3 months correlation between Aquestive and Painreform is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding Aquestive Therapeutics and Painreform in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Painreform 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 Painreform. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Painreform has no effect on the direction of Aquestive Therapeutics i.e., Aquestive Therapeutics and Painreform go up and down completely randomly.

Pair Corralation between Aquestive Therapeutics and Painreform

Given the investment horizon of 90 days Aquestive Therapeutics is expected to under-perform the Painreform. But the stock apears to be less risky and, when comparing its historical volatility, Aquestive Therapeutics is 6.21 times less risky than Painreform. The stock trades about -0.08 of its potential returns per unit of risk. The Painreform is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  348.00  in Painreform on September 13, 2024 and sell it today you would lose (48.00) from holding Painreform or give up 13.79% of portfolio value over 90 days.

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

Aquestive Therapeutics  vs.  Painreform

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 conflicting 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.

Painreform

Risk-Adjusted Performance

4 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Painreform are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of fairly inconsistent technical and fundamental indicators, Painreform showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Aquestive Therapeutics and Painreform

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

The idea behind Aquestive Therapeutics and Painreform 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.