Correlation Between Equillium and Aptose Biosciences

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

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

Diversification Opportunities for Equillium and Aptose Biosciences

0.42

Correlation Coefficient

Equillium  Aptose Biosciences

Very weak diversification

The 3 months correlation between Equillium and Aptose is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding Equillium and Aptose Biosciences in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aptose Biosciences and Equillium 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 Equillium are associated (or correlated) with Aptose Biosciences. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aptose Biosciences has no effect on the direction of Equillium i.e., Equillium and Aptose Biosciences go up and down completely randomly.

Pair Corralation between Equillium and Aptose Biosciences

Allowing for the 90-day total investment horizon Equillium is expected to generate 1.34 times more return on investment than Aptose Biosciences. However, Equillium is 1.34 times more volatile than Aptose Biosciences. It trades about 0.03 of its potential returns per unit of risk. Aptose Biosciences is currently generating about -0.12 per unit of risk. If you would invest  89.00  in Equillium on September 13, 2024 and sell it today you would lose (19.00) from holding Equillium or give up 21.35% of portfolio value over 90 days.

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

Equillium  vs.  Aptose Biosciences

Equillium

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Equillium has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, Equillium is not utilizing all of its potentials. The current stock price agitation, may contribute to short-term losses for the retail investors.

Aptose Biosciences

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Aptose Biosciences has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic 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 Equillium and Aptose Biosciences

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

The idea behind Equillium and Aptose Biosciences 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.

Check out your portfolio center.

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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.