Correlation Between Wildflower Brands and Aequus Pharmaceuticals

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

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

Diversification Opportunities for Wildflower Brands and Aequus Pharmaceuticals

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Correlation Coefficient

Wildflower Brands  Aequus Pharmaceuticals

Pay attention - limited upside

The 3 months correlation between Wildflower and Aequus is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Wildflower Brands and Aequus Pharmaceuticals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aequus Pharmaceuticals and Wildflower Brands 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 Wildflower Brands are associated (or correlated) with Aequus Pharmaceuticals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aequus Pharmaceuticals has no effect on the direction of Wildflower Brands i.e., Wildflower Brands and Aequus Pharmaceuticals go up and down completely randomly.

Pair Corralation between Wildflower Brands and Aequus Pharmaceuticals

Assuming the 90 days horizon Wildflower Brands is expected to under-perform the Aequus Pharmaceuticals. But the pink sheet apears to be less risky and, when comparing its historical volatility, Wildflower Brands is 2.13 times less risky than Aequus Pharmaceuticals. The pink sheet trades about -0.04 of its potential returns per unit of risk. The Aequus Pharmaceuticals is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  2.34  in Aequus Pharmaceuticals on September 20, 2024 and sell it today you would lose (1.95) from holding Aequus Pharmaceuticals or give up 83.33% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	99.8%
Values	Daily Returns

Wildflower Brands  vs.  Aequus Pharmaceuticals

Wildflower Brands

Risk-Adjusted Performance

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Very Weak

Over the last 90 days Wildflower Brands has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable technical and fundamental indicators, Wildflower Brands is not utilizing all of its potentials. The recent stock price disturbance, may contribute to mid-run losses for the stockholders.

Aequus Pharmaceuticals

Risk-Adjusted Performance

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Very Weak

Over the last 90 days Aequus Pharmaceuticals has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak 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 Wildflower Brands and Aequus Pharmaceuticals

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

The idea behind Wildflower Brands and Aequus Pharmaceuticals 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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.