Correlation Between Acumen Pharmaceuticals and ACADIA Pharmaceuticals

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

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

Diversification Opportunities for Acumen Pharmaceuticals and ACADIA Pharmaceuticals

-0.33

Correlation Coefficient

Acumen Pharmaceuticals  ACADIA Pharmaceuticals

Very good diversification

The 3 months correlation between Acumen and ACADIA is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding Acumen Pharmaceuticals and ACADIA Pharmaceuticals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ACADIA Pharmaceuticals and Acumen 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 Acumen Pharmaceuticals 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 Acumen Pharmaceuticals i.e., Acumen Pharmaceuticals and ACADIA Pharmaceuticals go up and down completely randomly.

Pair Corralation between Acumen Pharmaceuticals and ACADIA Pharmaceuticals

Given the investment horizon of 90 days Acumen Pharmaceuticals is expected to under-perform the ACADIA Pharmaceuticals. In addition to that, Acumen Pharmaceuticals is 2.7 times more volatile than ACADIA Pharmaceuticals. It trades about -0.19 of its total potential returns per unit of risk. ACADIA Pharmaceuticals is currently generating about -0.22 per unit of volatility. If you would invest  1,779  in ACADIA Pharmaceuticals on January 26, 2024 and sell it today you would lose (120.00) from holding ACADIA Pharmaceuticals or give up 6.75% of portfolio value over 90 days.

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

Acumen Pharmaceuticals  vs.  ACADIA Pharmaceuticals

Acumen Pharmaceuticals

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Acumen Pharmaceuticals are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Acumen Pharmaceuticals is not utilizing all of its potentials. The recent stock price uproar, may contribute to short-horizon losses for the private 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 unfluctuating 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 Acumen Pharmaceuticals and ACADIA Pharmaceuticals

The main advantage of trading using opposite Acumen Pharmaceuticals and ACADIA Pharmaceuticals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Acumen Pharmaceuticals 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 Acumen Pharmaceuticals 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.