Correlation Between Axonics Modulation and Legend BiotechCorp

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Can any of the company-specific risk be diversified away by investing in both Axonics Modulation and Legend BiotechCorp 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 Axonics Modulation and Legend BiotechCorp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Axonics Modulation Technologies and Legend BiotechCorp, you can compare the effects of market volatilities on Axonics Modulation and Legend BiotechCorp 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 Axonics Modulation with a short position of Legend BiotechCorp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Axonics Modulation and Legend BiotechCorp.

Diversification Opportunities for Axonics Modulation and Legend BiotechCorp

0.55
  Correlation Coefficient

Very weak diversification

The 3 months correlation between Axonics and Legend is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding Axonics Modulation Technologie and Legend BiotechCorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Legend BiotechCorp and Axonics Modulation 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 Axonics Modulation Technologies are associated (or correlated) with Legend BiotechCorp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Legend BiotechCorp has no effect on the direction of Axonics Modulation i.e., Axonics Modulation and Legend BiotechCorp go up and down completely randomly.

Pair Corralation between Axonics Modulation and Legend BiotechCorp

Given the investment horizon of 90 days Axonics Modulation Technologies is expected to generate 0.18 times more return on investment than Legend BiotechCorp. However, Axonics Modulation Technologies is 5.66 times less risky than Legend BiotechCorp. It trades about -0.02 of its potential returns per unit of risk. Legend BiotechCorp is currently generating about -0.27 per unit of risk. If you would invest  6,759  in Axonics Modulation Technologies on March 2, 2024 and sell it today you would lose (46.00) from holding Axonics Modulation Technologies or give up 0.68% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthWeak
Accuracy100.0%
ValuesDaily Returns

Axonics Modulation Technologie  vs.  Legend BiotechCorp

 Performance 
       Timeline  
Axonics Modulation 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Axonics Modulation Technologies has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, Axonics Modulation is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.
Legend BiotechCorp 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Legend BiotechCorp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's technical and fundamental indicators remain very healthy which may send shares a bit higher in July 2024. The recent disarray may also be a sign of long period up-swing for the firm investors.

Axonics Modulation and Legend BiotechCorp Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Axonics Modulation and Legend BiotechCorp

The main advantage of trading using opposite Axonics Modulation and Legend BiotechCorp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Axonics Modulation position performs unexpectedly, Legend BiotechCorp 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 Legend BiotechCorp will offset losses from the drop in Legend BiotechCorp's long position.
The idea behind Axonics Modulation Technologies and Legend BiotechCorp 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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.

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