Correlation Between Fennec Pharmaceuticals and Liquidia Technologies

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

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

Diversification Opportunities for Fennec Pharmaceuticals and Liquidia Technologies

-0.31

Correlation Coefficient

Fennec Pharmaceuticals  Liquidia Technologies

Very good diversification

The 3 months correlation between Fennec and Liquidia is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding Fennec Pharmaceuticals and Liquidia Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Liquidia Technologies and Fennec 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 Fennec Pharmaceuticals are associated (or correlated) with Liquidia Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Liquidia Technologies has no effect on the direction of Fennec Pharmaceuticals i.e., Fennec Pharmaceuticals and Liquidia Technologies go up and down completely randomly.

Pair Corralation between Fennec Pharmaceuticals and Liquidia Technologies

Given the investment horizon of 90 days Fennec Pharmaceuticals is expected to generate 1.93 times less return on investment than Liquidia Technologies. In addition to that, Fennec Pharmaceuticals is 1.46 times more volatile than Liquidia Technologies. It trades about 0.05 of its total potential returns per unit of risk. Liquidia Technologies is currently generating about 0.14 per unit of volatility. If you would invest  910.00  in Liquidia Technologies on September 3, 2024 and sell it today you would earn a total of  245.00  from holding Liquidia Technologies or generate 26.92% return on investment over 90 days.

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

Fennec Pharmaceuticals  vs.  Liquidia Technologies

Fennec Pharmaceuticals

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Fennec Pharmaceuticals are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady basic indicators, Fennec Pharmaceuticals exhibited solid returns over the last few months and may actually be approaching a breakup point.

Liquidia Technologies

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Liquidia Technologies are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite somewhat unfluctuating fundamental indicators, Liquidia Technologies sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Fennec Pharmaceuticals and Liquidia Technologies

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

The idea behind Fennec Pharmaceuticals and Liquidia Technologies 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.