Correlation Between Aequus Pharmaceuticals and Target

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

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

Diversification Opportunities for Aequus Pharmaceuticals and Target

0.48

Correlation Coefficient

Aequus Pharmaceuticals  Target

Very weak diversification

The 3 months correlation between Aequus and Target is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding Aequus Pharmaceuticals and Target Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Target Group and Aequus Pharmaceuticals 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 Aequus Pharmaceuticals 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 Aequus Pharmaceuticals i.e., Aequus Pharmaceuticals and Target go up and down completely randomly.

Pair Corralation between Aequus Pharmaceuticals and Target

Assuming the 90 days horizon Aequus Pharmaceuticals is expected to under-perform the Target. But the otc stock apears to be less risky and, when comparing its historical volatility, Aequus Pharmaceuticals is 1.67 times less risky than Target. The otc stock trades about -0.1 of its potential returns per unit of risk. The Target Group is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  0.20  in Target Group on September 14, 2024 and sell it today you would lose (0.06) from holding Target Group or give up 30.0% of portfolio value over 90 days.

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

Aequus Pharmaceuticals  vs.  Target Group

Aequus Pharmaceuticals

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Aequus Pharmaceuticals has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

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 Aequus Pharmaceuticals and Target

The main advantage of trading using opposite Aequus Pharmaceuticals and Target positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aequus Pharmaceuticals 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 Aequus Pharmaceuticals 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.