Correlation Between Adagene and Cigna Corp

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

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

Diversification Opportunities for Adagene and Cigna Corp

-0.67

Correlation Coefficient

Adagene  Cigna Corp

Excellent diversification

The 3 months correlation between Adagene and Cigna is -0.67. Overlapping area represents the amount of risk that can be diversified away by holding Adagene and Cigna Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cigna Corp and Adagene 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 Adagene are associated (or correlated) with Cigna Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cigna Corp has no effect on the direction of Adagene i.e., Adagene and Cigna Corp go up and down completely randomly.

Pair Corralation between Adagene and Cigna Corp

Given the investment horizon of 90 days Adagene is expected to generate 3.44 times more return on investment than Cigna Corp. However, Adagene is 3.44 times more volatile than Cigna Corp. It trades about 0.02 of its potential returns per unit of risk. Cigna Corp is currently generating about 0.05 per unit of risk. If you would invest  288.00  in Adagene on February 7, 2024 and sell it today you would lose (47.00) from holding Adagene or give up 16.32% of portfolio value over 90 days.

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

Adagene  vs.  Cigna Corp

Adagene

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Adagene has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in June 2024. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Cigna Corp

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Cigna Corp are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite fairly strong forward indicators, Cigna Corp is not utilizing all of its potentials. The latest stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with Adagene and Cigna Corp

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

The idea behind Adagene and Cigna Corp 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.