Correlation Between Axsome Therapeutics and AngioDynamics

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

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

Diversification Opportunities for Axsome Therapeutics and AngioDynamics

0.46

Correlation Coefficient

Axsome Therapeutics AngioDynamics

Very weak diversification

The 3 months correlation between Axsome and AngioDynamics is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding Axsome Therapeutics and AngioDynamics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AngioDynamics and Axsome 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 Axsome Therapeutics are associated (or correlated) with AngioDynamics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AngioDynamics has no effect on the direction of Axsome Therapeutics i.e., Axsome Therapeutics and AngioDynamics go up and down completely randomly.

Pair Corralation between Axsome Therapeutics and AngioDynamics

Given the investment horizon of 90 days Axsome Therapeutics is expected to generate 1.23 times more return on investment than AngioDynamics. However, Axsome Therapeutics is 1.23 times more volatile than AngioDynamics. It trades about 0.04 of its potential returns per unit of risk. AngioDynamics is currently generating about -0.07 per unit of risk. If you would invest  6,105  in Axsome Therapeutics on December 26, 2022 and sell it today you would earn a total of  91.00  from holding Axsome Therapeutics or generate 1.49% return on investment over 90 days.

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

Axsome Therapeutics  vs.  AngioDynamics

Axsome Therapeutics

Axsome Performance

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Over the last 90 days Axsome Therapeutics has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of abnormal performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in April 2023. The recent disarray may also be a sign of long period up-swing for the firm insiders.

AngioDynamics

AngioDynamics Performance

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Over the last 90 days AngioDynamics has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unfluctuating performance, the Stock's technical and fundamental indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm insiders.

Pair Trading with Axsome Therapeutics and AngioDynamics

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

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The idea behind Axsome Therapeutics and AngioDynamics 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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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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.