Correlation Between Achilles Therapeutics and Adynxx

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

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

Diversification Opportunities for Achilles Therapeutics and Adynxx

0.54

Correlation Coefficient

Achilles Therapeutics Adynxx

Very weak diversification

The 3 months correlation between Achilles and Adynxx is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding Achilles Therapeutics PLC and Adynxx Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Adynxx Inc and Achilles Therapeutics 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 Achilles Therapeutics PLC are associated (or correlated) with Adynxx. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Adynxx Inc has no effect on the direction of Achilles Therapeutics i.e., Achilles Therapeutics and Adynxx go up and down completely randomly.

Pair Corralation between Achilles Therapeutics and Adynxx

Given the investment horizon of 90 days Achilles Therapeutics PLC is expected to under-perform the Adynxx. But the stock apears to be less risky and, when comparing its historical volatility, Achilles Therapeutics PLC is 4.41 times less risky than Adynxx. The stock trades about -0.09 of its potential returns per unit of risk. The Adynxx Inc is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  0.03  in Adynxx Inc on March 3, 2023 and sell it today you would lose (0.02)  from holding Adynxx Inc or give up 66.67% of portfolio value over 90 days.

Achilles Therapeutics PLC  vs.  Adynxx Inc

Achilles Therapeutics PLC

Achilles Performance

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Over the last 90 days Achilles Therapeutics PLC has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent technical indicators, Achilles Therapeutics is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Adynxx Inc

Adynxx Performance

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Over the last 90 days Adynxx Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, Adynxx is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Achilles Therapeutics and Adynxx

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

The idea behind Achilles Therapeutics PLC and Adynxx Inc 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.