Correlation Between Fortress Biotech and Aptose Biosciences

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

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

Diversification Opportunities for Fortress Biotech and Aptose Biosciences

-0.06

Correlation Coefficient

Fortress Biotech  Aptose Biosciences

Good diversification

The 3 months correlation between Fortress and Aptose is -0.06. Overlapping area represents the amount of risk that can be diversified away by holding Fortress Biotech and Aptose Biosciences in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aptose Biosciences and Fortress Biotech 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 Fortress Biotech 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 Fortress Biotech i.e., Fortress Biotech and Aptose Biosciences go up and down completely randomly.

Pair Corralation between Fortress Biotech and Aptose Biosciences

Given the investment horizon of 90 days Fortress Biotech is expected to generate 0.92 times more return on investment than Aptose Biosciences. However, Fortress Biotech is 1.09 times less risky than Aptose Biosciences. It trades about 0.05 of its potential returns per unit of risk. Aptose Biosciences is currently generating about -0.21 per unit of risk. If you would invest  197.00  in Fortress Biotech on September 3, 2024 and sell it today you would earn a total of  16.00  from holding Fortress Biotech or generate 8.12% return on investment over 90 days.

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

Fortress Biotech  vs.  Aptose Biosciences

Fortress Biotech

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Fortress Biotech are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating forward indicators, Fortress Biotech displayed solid returns over the last few months and may actually be approaching a breakup point.

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 Fortress Biotech and Aptose Biosciences

The main advantage of trading using opposite Fortress Biotech and Aptose Biosciences positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fortress Biotech 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 Fortress Biotech 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.

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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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.