Correlation Between Aclaris Therapeutics and Ardelyx

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

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

Diversification Opportunities for Aclaris Therapeutics and Ardelyx

0.53

Correlation Coefficient

Aclaris Therapeutics  Ardelyx

Very weak diversification

The 3 months correlation between Aclaris and Ardelyx is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding Aclaris Therapeutics and Ardelyx in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ardelyx and Aclaris 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 Aclaris Therapeutics are associated (or correlated) with Ardelyx. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ardelyx has no effect on the direction of Aclaris Therapeutics i.e., Aclaris Therapeutics and Ardelyx go up and down completely randomly.

Pair Corralation between Aclaris Therapeutics and Ardelyx

Given the investment horizon of 90 days Aclaris Therapeutics is expected to under-perform the Ardelyx. But the stock apears to be less risky and, when comparing its historical volatility, Aclaris Therapeutics is 1.85 times less risky than Ardelyx. The stock trades about -0.09 of its potential returns per unit of risk. The Ardelyx is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest  713.00  in Ardelyx on March 11, 2024 and sell it today you would lose (68.00) from holding Ardelyx or give up 9.54% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

Aclaris Therapeutics  vs.  Ardelyx

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 conflicting performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in July 2024. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Ardelyx

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Ardelyx has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's fundamental indicators remain fairly strong which may send shares a bit higher in July 2024. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Aclaris Therapeutics and Ardelyx

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

The idea behind Aclaris Therapeutics and Ardelyx 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..