Correlation Between Aadi Bioscience and Agilent Technologies

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Can any of the company-specific risk be diversified away by investing in both Aadi Bioscience and Agilent Technologies 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 Aadi Bioscience and Agilent Technologies into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Aadi Bioscience and Agilent Technologies, you can compare the effects of market volatilities on Aadi Bioscience and Agilent Technologies 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 Aadi Bioscience with a short position of Agilent Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aadi Bioscience and Agilent Technologies.

Diversification Opportunities for Aadi Bioscience and Agilent Technologies

0.85
  Correlation Coefficient

Very poor diversification

The 3 months correlation between Aadi and Agilent is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Aadi Bioscience and Agilent Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Agilent Technologies and Aadi Bioscience 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 Aadi Bioscience are associated (or correlated) with Agilent Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Agilent Technologies has no effect on the direction of Aadi Bioscience i.e., Aadi Bioscience and Agilent Technologies go up and down completely randomly.

Pair Corralation between Aadi Bioscience and Agilent Technologies

Given the investment horizon of 90 days Aadi Bioscience is expected to generate 5.75 times more return on investment than Agilent Technologies. However, Aadi Bioscience is 5.75 times more volatile than Agilent Technologies. It trades about 0.11 of its potential returns per unit of risk. Agilent Technologies is currently generating about 0.3 per unit of risk. If you would invest  207.00  in Aadi Bioscience on December 29, 2023 and sell it today you would earn a total of  30.00  from holding Aadi Bioscience or generate 14.49% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthStrong
Accuracy95.65%
ValuesDaily Returns

Aadi Bioscience  vs.  Agilent Technologies

 Performance 
       Timeline  
Aadi Bioscience 

Risk-Adjusted Performance

5 of 100

 
Low
 
High
Modest
Compared to the overall equity markets, risk-adjusted returns on investments in Aadi Bioscience are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite fairly weak fundamental indicators, Aadi Bioscience demonstrated solid returns over the last few months and may actually be approaching a breakup point.
Agilent Technologies 

Risk-Adjusted Performance

4 of 100

 
Low
 
High
Modest
Compared to the overall equity markets, risk-adjusted returns on investments in Agilent Technologies are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Agilent Technologies is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Aadi Bioscience and Agilent Technologies Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Aadi Bioscience and Agilent Technologies

The main advantage of trading using opposite Aadi Bioscience and Agilent Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aadi Bioscience position performs unexpectedly, Agilent Technologies 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 Agilent Technologies will offset losses from the drop in Agilent Technologies' long position.
The idea behind Aadi Bioscience and Agilent Technologies 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.

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