Correlation Between Equitech International and Albireo Pharma

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

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

Diversification Opportunities for Equitech International and Albireo Pharma

-0.1

Correlation Coefficient

Equitech International  Albireo Pharma

Good diversification

The 3 months correlation between Equitech and Albireo is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding Equitech International and Albireo Pharma in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Albireo Pharma and Equitech International 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 Equitech International are associated (or correlated) with Albireo Pharma. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Albireo Pharma has no effect on the direction of Equitech International i.e., Equitech International and Albireo Pharma go up and down completely randomly.

Pair Corralation between Equitech International and Albireo Pharma

If you would invest  375.00  in Equitech International on January 25, 2024 and sell it today you would lose (255.00) from holding Equitech International or give up 68.0% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	0.48%
Values	Daily Returns

Equitech International  vs.  Albireo Pharma

Equitech International

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Equitech International are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite quite abnormal basic indicators, Equitech International may actually be approaching a critical reversion point that can send shares even higher in May 2024.

Albireo Pharma

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Albireo Pharma has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy fundamental drivers, Albireo Pharma is not utilizing all of its potentials. The newest stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Equitech International and Albireo Pharma

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

The idea behind Equitech International and Albireo Pharma 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.