Correlation Between Equillium and Agios Pharm

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

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

Diversification Opportunities for Equillium and Agios Pharm

-0.02

Correlation Coefficient

Equillium  Agios Pharm

Good diversification

The 3 months correlation between Equillium and Agios is -0.02. Overlapping area represents the amount of risk that can be diversified away by holding Equillium and Agios Pharm in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Agios Pharm and Equillium 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 Equillium are associated (or correlated) with Agios Pharm. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Agios Pharm has no effect on the direction of Equillium i.e., Equillium and Agios Pharm go up and down completely randomly.

Pair Corralation between Equillium and Agios Pharm

Allowing for the 90-day total investment horizon Equillium is expected to under-perform the Agios Pharm. In addition to that, Equillium is 2.84 times more volatile than Agios Pharm. It trades about -0.01 of its total potential returns per unit of risk. Agios Pharm is currently generating about 0.15 per unit of volatility. If you would invest  2,680  in Agios Pharm on February 15, 2024 and sell it today you would earn a total of  734.00  from holding Agios Pharm or generate 27.39% return on investment over 90 days.

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

Equillium  vs.  Agios Pharm

Equillium

Risk-Adjusted Performance

0 of 100

Weak

Over the last 90 days Equillium has generated negative risk-adjusted returns adding no value to investors with long positions. Even with latest weak performance, the Stock's basic indicators remain invariable and the latest agitation on Wall Street may also be a sign of long-running gains for the enterprise retail investors.

Agios Pharm

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Agios Pharm are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating forward indicators, Agios Pharm displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Equillium and Agios Pharm

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

The idea behind Equillium and Agios Pharm 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.