Correlation Between Aequus Pharmaceuticals and Charlottes Web

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

By analyzing existing cross correlation between Aequus Pharmaceuticals and Charlottes Web Holdings, you can compare the effects of market volatilities on Aequus Pharmaceuticals and Charlottes Web 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 Charlottes Web. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aequus Pharmaceuticals and Charlottes Web.

Diversification Opportunities for Aequus Pharmaceuticals and Charlottes Web

0.52

Correlation Coefficient

Aequus Pharmaceuticals  Charlottes Web

Very weak diversification

The 3 months correlation between Aequus and Charlottes is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding Aequus Pharmaceuticals and Charlottes Web Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Charlottes Web Holdings 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 Charlottes Web. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Charlottes Web Holdings has no effect on the direction of Aequus Pharmaceuticals i.e., Aequus Pharmaceuticals and Charlottes Web go up and down completely randomly.

Pair Corralation between Aequus Pharmaceuticals and Charlottes Web

Assuming the 90 days horizon Aequus Pharmaceuticals is expected to under-perform the Charlottes Web. In addition to that, Aequus Pharmaceuticals is 1.86 times more volatile than Charlottes Web Holdings. It trades about -0.1 of its total potential returns per unit of risk. Charlottes Web Holdings is currently generating about -0.09 per unit of volatility. If you would invest  14.00  in Charlottes Web Holdings on September 19, 2024 and sell it today you would lose (4.00) from holding Charlottes Web Holdings or give up 28.57% 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.  Charlottes Web Holdings

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.

Charlottes Web Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Charlottes Web Holdings 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 technical 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.

Pair Trading with Aequus Pharmaceuticals and Charlottes Web

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

The idea behind Aequus Pharmaceuticals and Charlottes Web Holdings 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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.