Correlation Between Soligenix and Avenue Therapeutics

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

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

Diversification Opportunities for Soligenix and Avenue Therapeutics

0.27

Correlation Coefficient

Soligenix  Avenue Therapeutics

Modest diversification

The 3 months correlation between Soligenix and Avenue is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding Soligenix and Avenue Therapeutics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Avenue Therapeutics and Soligenix 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 Soligenix are associated (or correlated) with Avenue Therapeutics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Avenue Therapeutics has no effect on the direction of Soligenix i.e., Soligenix and Avenue Therapeutics go up and down completely randomly.

Pair Corralation between Soligenix and Avenue Therapeutics

Given the investment horizon of 90 days Soligenix is expected to generate 1.31 times more return on investment than Avenue Therapeutics. However, Soligenix is 1.31 times more volatile than Avenue Therapeutics. It trades about 0.02 of its potential returns per unit of risk. Avenue Therapeutics is currently generating about -0.13 per unit of risk. If you would invest  361.00  in Soligenix on September 13, 2024 and sell it today you would lose (14.00) from holding Soligenix or give up 3.88% of portfolio value over 90 days.

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

Soligenix  vs.  Avenue Therapeutics

Soligenix

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Soligenix are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong technical and fundamental indicators, Soligenix is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Avenue Therapeutics

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Avenue Therapeutics has generated negative risk-adjusted returns adding no value to investors with long positions. Despite inconsistent performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in January 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Pair Trading with Soligenix and Avenue Therapeutics

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

The idea behind Soligenix and Avenue Therapeutics 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.