Correlation Between Agilent Technologies and ACADIA Pharmaceuticals

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

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

Diversification Opportunities for Agilent Technologies and ACADIA Pharmaceuticals

-0.76

Correlation Coefficient

Agilent Technologies  ACADIA Pharmaceuticals

Pay attention - limited upside

The 3 months correlation between Agilent and ACADIA is -0.76. Overlapping area represents the amount of risk that can be diversified away by holding Agilent Technologies and ACADIA Pharmaceuticals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ACADIA Pharmaceuticals and Agilent Technologies 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 Agilent Technologies are associated (or correlated) with ACADIA Pharmaceuticals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ACADIA Pharmaceuticals has no effect on the direction of Agilent Technologies i.e., Agilent Technologies and ACADIA Pharmaceuticals go up and down completely randomly.

Pair Corralation between Agilent Technologies and ACADIA Pharmaceuticals

Taking into account the 90-day investment horizon Agilent Technologies is expected to under-perform the ACADIA Pharmaceuticals. In addition to that, Agilent Technologies is 1.01 times more volatile than ACADIA Pharmaceuticals. It trades about -0.34 of its total potential returns per unit of risk. ACADIA Pharmaceuticals is currently generating about -0.28 per unit of volatility. If you would invest  1,866  in ACADIA Pharmaceuticals on January 20, 2024 and sell it today you would lose (159.00) from holding ACADIA Pharmaceuticals or give up 8.52% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	95.45%
Values	Daily Returns

Agilent Technologies  vs.  ACADIA Pharmaceuticals

Agilent Technologies

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Agilent Technologies has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Agilent Technologies is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

ACADIA Pharmaceuticals

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ACADIA Pharmaceuticals has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of conflicting performance in the last few months, the Stock's basic indicators remain rather sound which may send shares a bit higher in May 2024. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with Agilent Technologies and ACADIA Pharmaceuticals

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

The idea behind Agilent Technologies and ACADIA 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 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.