Correlation Between Aclaris Therapeutics and Biodesix

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

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

Diversification Opportunities for Aclaris Therapeutics and Biodesix

-0.83

Correlation Coefficient

Aclaris Therapeutics  Biodesix

Pay attention - limited upside

The 3 months correlation between Aclaris and Biodesix is -0.83. Overlapping area represents the amount of risk that can be diversified away by holding Aclaris Therapeutics and Biodesix in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Biodesix and Aclaris 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 Aclaris Therapeutics are associated (or correlated) with Biodesix. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Biodesix has no effect on the direction of Aclaris Therapeutics i.e., Aclaris Therapeutics and Biodesix go up and down completely randomly.

Pair Corralation between Aclaris Therapeutics and Biodesix

Given the investment horizon of 90 days Aclaris Therapeutics is expected to under-perform the Biodesix. In addition to that, Aclaris Therapeutics is 1.04 times more volatile than Biodesix. It trades about -0.35 of its total potential returns per unit of risk. Biodesix is currently generating about 0.13 per unit of volatility. If you would invest  133.00  in Biodesix on September 25, 2024 and sell it today you would earn a total of  14.00  from holding Biodesix or generate 10.53% return on investment over 90 days.

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

Aclaris Therapeutics  vs.  Biodesix

Aclaris Therapeutics

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Aclaris Therapeutics are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady basic indicators, Aclaris Therapeutics unveiled solid returns over the last few months and may actually be approaching a breakup point.

Biodesix

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Biodesix has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unsteady performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with Aclaris Therapeutics and Biodesix

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

The idea behind Aclaris Therapeutics and Biodesix 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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.