Correlation Between Shuttle Pharmaceuticals and Axsome Therapeutics

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

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

Diversification Opportunities for Shuttle Pharmaceuticals and Axsome Therapeutics

0.18

Correlation Coefficient

Shuttle Pharmaceuticals  Axsome Therapeutics

Average diversification

The 3 months correlation between Shuttle and Axsome is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding Shuttle Pharmaceuticals and Axsome Therapeutics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Axsome Therapeutics and Shuttle Pharmaceuticals 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 Shuttle Pharmaceuticals are associated (or correlated) with Axsome Therapeutics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Axsome Therapeutics has no effect on the direction of Shuttle Pharmaceuticals i.e., Shuttle Pharmaceuticals and Axsome Therapeutics go up and down completely randomly.

Pair Corralation between Shuttle Pharmaceuticals and Axsome Therapeutics

Given the investment horizon of 90 days Shuttle Pharmaceuticals is expected to generate 1.55 times more return on investment than Axsome Therapeutics. However, Shuttle Pharmaceuticals is 1.55 times more volatile than Axsome Therapeutics. It trades about 0.05 of its potential returns per unit of risk. Axsome Therapeutics is currently generating about 0.05 per unit of risk. If you would invest  43.00  in Shuttle Pharmaceuticals on March 13, 2024 and sell it today you would earn a total of  4.00  from holding Shuttle Pharmaceuticals or generate 9.3% return on investment over 90 days.

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

Shuttle Pharmaceuticals  vs.  Axsome Therapeutics

Shuttle Pharmaceuticals

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Shuttle Pharmaceuticals are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite fairly inconsistent basic indicators, Shuttle Pharmaceuticals demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Axsome Therapeutics

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Axsome Therapeutics are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of very uncertain basic indicators, Axsome Therapeutics may actually be approaching a critical reversion point that can send shares even higher in July 2024.

Pair Trading with Shuttle Pharmaceuticals and Axsome Therapeutics

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

The idea behind Shuttle Pharmaceuticals and Axsome Therapeutics 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.