Correlation Between Acorda Therapeutics and Aclaris Therapeutics

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

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

Diversification Opportunities for Acorda Therapeutics and Aclaris Therapeutics

-0.02

Correlation Coefficient

Acorda Therapeutics  Aclaris Therapeutics

Good diversification

The 3 months correlation between Acorda and Aclaris is -0.02. Overlapping area represents the amount of risk that can be diversified away by holding Acorda Therapeutics and Aclaris Therapeutics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aclaris Therapeutics and Acorda 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 Acorda Therapeutics 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 Acorda Therapeutics i.e., Acorda Therapeutics and Aclaris Therapeutics go up and down completely randomly.

Pair Corralation between Acorda Therapeutics and Aclaris Therapeutics

Given the investment horizon of 90 days Acorda Therapeutics is expected to under-perform the Aclaris Therapeutics. In addition to that, Acorda Therapeutics is 8.06 times more volatile than Aclaris Therapeutics. It trades about -0.56 of its total potential returns per unit of risk. Aclaris Therapeutics is currently generating about 0.07 per unit of volatility. If you would invest  119.00  in Aclaris Therapeutics on January 20, 2024 and sell it today you would earn a total of  4.00  from holding Aclaris Therapeutics or generate 3.36% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	77.27%
Values	Daily Returns

Acorda Therapeutics  vs.  Aclaris Therapeutics

Acorda Therapeutics

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Acorda Therapeutics has generated negative risk-adjusted returns adding no value to investors with long positions. Even with weak performance in the last few months, the Stock's basic indicators remain relatively invariable which may send shares a bit higher in May 2024. The latest agitation may also be a sign of long-running up-swing for the enterprise retail 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 newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Acorda Therapeutics and Aclaris Therapeutics

The main advantage of trading using opposite Acorda Therapeutics and Aclaris Therapeutics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Acorda Therapeutics 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 Acorda Therapeutics 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.