Correlation Between Wesana Health and Aridis Pharmaceuticals

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

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

Diversification Opportunities for Wesana Health and Aridis Pharmaceuticals

0.32

Correlation Coefficient

Wesana Health  Aridis Pharmaceuticals

Weak diversification

The 3 months correlation between Wesana and Aridis is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding Wesana Health Holdings and Aridis Pharmaceuticals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aridis Pharmaceuticals and Wesana Health 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 Wesana Health Holdings are associated (or correlated) with Aridis Pharmaceuticals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aridis Pharmaceuticals has no effect on the direction of Wesana Health i.e., Wesana Health and Aridis Pharmaceuticals go up and down completely randomly.

Pair Corralation between Wesana Health and Aridis Pharmaceuticals

If you would invest  0.56  in Wesana Health Holdings on September 15, 2024 and sell it today you would earn a total of  0.04  from holding Wesana Health Holdings or generate 7.14% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	1.56%
Values	Daily Returns

Wesana Health Holdings  vs.  Aridis Pharmaceuticals

Wesana Health Holdings

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Wesana Health Holdings are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak basic indicators, Wesana Health reported solid returns over the last few months and may actually be approaching a breakup point.

Aridis Pharmaceuticals

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Aridis Pharmaceuticals has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable fundamental indicators, Aridis Pharmaceuticals is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Wesana Health and Aridis Pharmaceuticals

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

The idea behind Wesana Health Holdings and Aridis 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.

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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.