Correlation Between Achieve Life and Aclaris Therapeutics

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

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

Diversification Opportunities for Achieve Life and Aclaris Therapeutics

-0.04

Correlation Coefficient

Achieve Life  Aclaris Therapeutics

Good diversification

The 3 months correlation between Achieve and Aclaris is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding Achieve Life Sciences and Aclaris Therapeutics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aclaris Therapeutics and Achieve Life 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 Achieve Life Sciences are associated (or correlated) with Aclaris Therapeutics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aclaris Therapeutics has no effect on the direction of Achieve Life i.e., Achieve Life and Aclaris Therapeutics go up and down completely randomly.

Pair Corralation between Achieve Life and Aclaris Therapeutics

Given the investment horizon of 90 days Achieve Life Sciences is expected to under-perform the Aclaris Therapeutics. But the stock apears to be less risky and, when comparing its historical volatility, Achieve Life Sciences is 1.32 times less risky than Aclaris Therapeutics. The stock trades about -0.06 of its potential returns per unit of risk. The Aclaris Therapeutics is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  118.00  in Aclaris Therapeutics on January 26, 2024 and sell it today you would earn a total of  4.00  from holding Aclaris Therapeutics or generate 3.39% return on investment over 90 days.

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

Achieve Life Sciences  vs.  Aclaris Therapeutics

Achieve Life Sciences

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Achieve Life Sciences has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's technical indicators remain stable and the latest fuss on Wall Street may also be a sign of long-term gains for the venture sophisticated investors.

Aclaris Therapeutics

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Aclaris Therapeutics has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Aclaris Therapeutics 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 Achieve Life and Aclaris Therapeutics

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

The idea behind Achieve Life Sciences and Aclaris Therapeutics 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..