Correlation Between Aerie Pharmaceuticals and Playstudios

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

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

Diversification Opportunities for Aerie Pharmaceuticals and Playstudios

0.14

Correlation Coefficient

Aerie Pharmaceuticals  Playstudios

Average diversification

The 3 months correlation between Aerie and Playstudios is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding Aerie Pharmaceuticals and Playstudios in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Playstudios and Aerie 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 Aerie Pharmaceuticals are associated (or correlated) with Playstudios. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Playstudios has no effect on the direction of Aerie Pharmaceuticals i.e., Aerie Pharmaceuticals and Playstudios go up and down completely randomly.

Pair Corralation between Aerie Pharmaceuticals and Playstudios

If you would invest  219.00  in Playstudios on February 23, 2024 and sell it today you would earn a total of  3.00  from holding Playstudios or generate 1.37% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Aerie Pharmaceuticals  vs.  Playstudios

Aerie Pharmaceuticals

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Aerie Pharmaceuticals has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong basic indicators, Aerie Pharmaceuticals is not utilizing all of its potentials. The current stock price confusion, may contribute to short-horizon losses for the traders.

Playstudios

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Playstudios are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Playstudios 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 Aerie Pharmaceuticals and Playstudios

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

The idea behind Aerie Pharmaceuticals and Playstudios 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.