Correlation Between Ardelyx and Regeneron Pharmaceuticals

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

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

Diversification Opportunities for Ardelyx and Regeneron Pharmaceuticals

0.57

Correlation Coefficient

Ardelyx  Regeneron Pharmaceuticals

Very weak diversification

The 3 months correlation between Ardelyx and Regeneron is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding Ardelyx and Regeneron Pharmaceuticals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Regeneron Pharmaceuticals and Ardelyx 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 Ardelyx are associated (or correlated) with Regeneron Pharmaceuticals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Regeneron Pharmaceuticals has no effect on the direction of Ardelyx i.e., Ardelyx and Regeneron Pharmaceuticals go up and down completely randomly.

Pair Corralation between Ardelyx and Regeneron Pharmaceuticals

Given the investment horizon of 90 days Ardelyx is expected to generate 2.52 times more return on investment than Regeneron Pharmaceuticals. However, Ardelyx is 2.52 times more volatile than Regeneron Pharmaceuticals. It trades about 0.02 of its potential returns per unit of risk. Regeneron Pharmaceuticals is currently generating about -0.37 per unit of risk. If you would invest  563.00  in Ardelyx on September 3, 2024 and sell it today you would lose (9.00) from holding Ardelyx or give up 1.6% of portfolio value over 90 days.

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

Ardelyx  vs.  Regeneron Pharmaceuticals

Ardelyx

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Ardelyx are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong fundamental indicators, Ardelyx is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Regeneron Pharmaceuticals

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Regeneron Pharmaceuticals 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 technical and fundamental indicators remain very healthy which may send shares a bit higher in January 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with Ardelyx and Regeneron Pharmaceuticals

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

The idea behind Ardelyx and Regeneron Pharmaceuticals 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.