Correlation Between Alector and Aclaris Therapeutics

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

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

Diversification Opportunities for Alector and Aclaris Therapeutics

0.91

Correlation Coefficient

Alector  Aclaris Therapeutics

Almost no diversification

The 3 months correlation between Alector and Aclaris is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding Alector and Aclaris Therapeutics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aclaris Therapeutics and Alector 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 Alector are associated (or correlated) with Aclaris Therapeutics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aclaris Therapeutics has no effect on the direction of Alector i.e., Alector and Aclaris Therapeutics go up and down completely randomly.

Pair Corralation between Alector and Aclaris Therapeutics

Given the investment horizon of 90 days Alector is expected to generate 1.48 times more return on investment than Aclaris Therapeutics. However, Alector is 1.48 times more volatile than Aclaris Therapeutics. It trades about 0.09 of its potential returns per unit of risk. Aclaris Therapeutics is currently generating about 0.09 per unit of risk. If you would invest  116.00  in Alector on May 5, 2025 and sell it today you would earn a total of  29.00  from holding Alector or generate 25.0% return on investment over 90 days.

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

Alector  vs.  Aclaris Therapeutics

Alector

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Alector are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak technical and fundamental indicators, Alector exhibited solid returns over the last few months and may actually be approaching a breakup point.

Aclaris Therapeutics

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Aclaris Therapeutics are ranked lower than 7 (%) 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.

Pair Trading with Alector and Aclaris Therapeutics

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

The idea behind Alector and Aclaris 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.