Correlation Between Milestone Pharmaceuticals and Adagene

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

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

Diversification Opportunities for Milestone Pharmaceuticals and Adagene

-0.33

Correlation Coefficient

Milestone Pharmaceuticals  Adagene

Very good diversification

The 3 months correlation between Milestone and Adagene is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding Milestone Pharmaceuticals and Adagene in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Adagene and Milestone 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 Milestone Pharmaceuticals are associated (or correlated) with Adagene. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Adagene has no effect on the direction of Milestone Pharmaceuticals i.e., Milestone Pharmaceuticals and Adagene go up and down completely randomly.

Pair Corralation between Milestone Pharmaceuticals and Adagene

Given the investment horizon of 90 days Milestone Pharmaceuticals is expected to generate 0.47 times more return on investment than Adagene. However, Milestone Pharmaceuticals is 2.13 times less risky than Adagene. It trades about 0.18 of its potential returns per unit of risk. Adagene is currently generating about -0.04 per unit of risk. If you would invest  149.00  in Milestone Pharmaceuticals on September 4, 2024 and sell it today you would earn a total of  51.00  from holding Milestone Pharmaceuticals or generate 34.23% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.44%
Values	Daily Returns

Milestone Pharmaceuticals  vs.  Adagene

Milestone Pharmaceuticals

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Milestone Pharmaceuticals are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady basic indicators, Milestone Pharmaceuticals unveiled solid returns over the last few months and may actually be approaching a breakup point.

Adagene

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Adagene has generated negative risk-adjusted returns adding no value to investors with long positions. Despite conflicting performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Milestone Pharmaceuticals and Adagene

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

The idea behind Milestone Pharmaceuticals and Adagene 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.