Correlation Between Effector Therapeutics and AptarGroup

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

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

Diversification Opportunities for Effector Therapeutics and AptarGroup

-0.43

Correlation Coefficient

Effector Therapeutics  AptarGroup

Very good diversification

The 3 months correlation between Effector and AptarGroup is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding Effector Therapeutics and AptarGroup in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AptarGroup and Effector 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 Effector Therapeutics are associated (or correlated) with AptarGroup. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AptarGroup has no effect on the direction of Effector Therapeutics i.e., Effector Therapeutics and AptarGroup go up and down completely randomly.

Pair Corralation between Effector Therapeutics and AptarGroup

Given the investment horizon of 90 days Effector Therapeutics is expected to under-perform the AptarGroup. In addition to that, Effector Therapeutics is 9.16 times more volatile than AptarGroup. It trades about -0.12 of its total potential returns per unit of risk. AptarGroup is currently generating about 0.13 per unit of volatility. If you would invest  11,086  in AptarGroup on August 28, 2024 and sell it today you would earn a total of  6,164  from holding AptarGroup or generate 55.6% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	71.47%
Values	Daily Returns

Effector Therapeutics  vs.  AptarGroup

Effector Therapeutics

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Effector Therapeutics has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, Effector Therapeutics is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

AptarGroup

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in AptarGroup are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Even with relatively unsteady basic indicators, AptarGroup reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Effector Therapeutics and AptarGroup

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

The idea behind Effector Therapeutics and AptarGroup 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 Commodity Directory module to find actively traded commodities issued by global exchanges.