Can any of the company-specific risk be diversified away by investing in both Aditxt and Vaccitech PLC 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 Aditxt and Vaccitech PLC into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Aditxt Inc and Vaccitech PLC ADR, you can compare the effects of market volatilities on Aditxt and Vaccitech PLC 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 Aditxt with a short position of Vaccitech PLC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aditxt and Vaccitech PLC.
Diversification Opportunities for Aditxt and Vaccitech PLC
The 3 months correlation between Aditxt and Vaccitech is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding Aditxt Inc and Vaccitech PLC ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vaccitech PLC ADR and Aditxt 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 Aditxt Inc are associated (or correlated) with Vaccitech PLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vaccitech PLC ADR has no effect on the direction of Aditxt i.e., Aditxt and Vaccitech PLC go up and down completely randomly.
If you would invest 491.00 in Vaccitech PLC ADR on September 10, 2023 and sell it today you would earn a total of 0.00 from holding Vaccitech PLC ADR or generate 0.0% return on investment over 90 days.
Over the last 90 days Aditxt Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in January 2024. The current disturbance may also be a sign of long term up-swing for the company investors.
Over the last 90 days Vaccitech PLC ADR has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather unsteady fundamental indicators, Vaccitech PLC exhibited solid returns over the last few months and may actually be approaching a breakup point.
The main advantage of trading using opposite Aditxt and Vaccitech PLC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aditxt position performs unexpectedly, Vaccitech PLC 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 Vaccitech PLC will offset losses from the drop in Vaccitech PLC's long position.
The idea behind Aditxt Inc and Vaccitech PLC ADR 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 the Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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