Correlation Between Ibio and Acasti Pharma

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

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

Diversification Opportunities for Ibio and Acasti Pharma

0.22

Correlation Coefficient

Ibio  Acasti Pharma

Modest diversification

The 3 months correlation between Ibio and Acasti is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding Ibio Inc and Acasti Pharma in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Acasti Pharma and Ibio 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 Ibio Inc are associated (or correlated) with Acasti Pharma. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Acasti Pharma has no effect on the direction of Ibio i.e., Ibio and Acasti Pharma go up and down completely randomly.

Pair Corralation between Ibio and Acasti Pharma

Given the investment horizon of 90 days Ibio is expected to generate 1.13 times less return on investment than Acasti Pharma. In addition to that, Ibio is 1.02 times more volatile than Acasti Pharma. It trades about 0.15 of its total potential returns per unit of risk. Acasti Pharma is currently generating about 0.17 per unit of volatility. If you would invest  250.00  in Acasti Pharma on September 4, 2024 and sell it today you would earn a total of  87.00  from holding Acasti Pharma or generate 34.8% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	60.94%
Values	Daily Returns

Ibio Inc  vs.  Acasti Pharma

Ibio Inc

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Ibio Inc are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of very weak forward indicators, Ibio displayed solid returns over the last few months and may actually be approaching a breakup point.

Acasti Pharma

Risk-Adjusted Performance

0 of 100

Good

Over the last 90 days Acasti Pharma has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively weak basic indicators, Acasti Pharma unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Ibio and Acasti Pharma

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

The idea behind Ibio Inc and Acasti Pharma 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.