Correlation Between ACRX Old and Adverum Biotechnologies

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

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

Diversification Opportunities for ACRX Old and Adverum Biotechnologies

-0.29

Correlation Coefficient

ACRX Old  Adverum Biotechnologies

Very good diversification

The 3 months correlation between ACRX and Adverum is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding ACRX Old and Adverum Biotechnologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Adverum Biotechnologies and ACRX Old 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 ACRX Old are associated (or correlated) with Adverum Biotechnologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Adverum Biotechnologies has no effect on the direction of ACRX Old i.e., ACRX Old and Adverum Biotechnologies go up and down completely randomly.

Pair Corralation between ACRX Old and Adverum Biotechnologies

If you would invest  113.00  in ACRX Old on January 26, 2024 and sell it today you would earn a total of  0.00  from holding ACRX Old or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	4.76%
Values	Daily Returns

ACRX Old  vs.  Adverum Biotechnologies

ACRX Old

Risk-Adjusted Performance

0 of 100

Modest

Over the last 90 days ACRX Old has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly conflicting basic indicators, ACRX Old showed solid returns over the last few months and may actually be approaching a breakup point.

Adverum Biotechnologies

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Adverum Biotechnologies are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of very unsteady basic indicators, Adverum Biotechnologies displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with ACRX Old and Adverum Biotechnologies

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

The idea behind ACRX Old and Adverum Biotechnologies 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.