Correlation Between Scpharmaceuticals and Achilles Therapeutics

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

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

Diversification Opportunities for Scpharmaceuticals and Achilles Therapeutics

-0.82

Correlation Coefficient

Scpharmaceuticals  Achilles Therapeutics

Pay attention - limited upside

The 3 months correlation between Scpharmaceuticals and Achilles is -0.82. Overlapping area represents the amount of risk that can be diversified away by holding Scpharmaceuticals and Achilles Therapeutics PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Achilles Therapeutics PLC and Scpharmaceuticals 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 Scpharmaceuticals are associated (or correlated) with Achilles Therapeutics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Achilles Therapeutics PLC has no effect on the direction of Scpharmaceuticals i.e., Scpharmaceuticals and Achilles Therapeutics go up and down completely randomly.

Pair Corralation between Scpharmaceuticals and Achilles Therapeutics

Given the investment horizon of 90 days Scpharmaceuticals is expected to generate 5.41 times less return on investment than Achilles Therapeutics. In addition to that, Scpharmaceuticals is 2.7 times more volatile than Achilles Therapeutics PLC. It trades about 0.02 of its total potential returns per unit of risk. Achilles Therapeutics PLC is currently generating about 0.26 per unit of volatility. If you would invest  99.00  in Achilles Therapeutics PLC on August 13, 2024 and sell it today you would earn a total of  6.00  from holding Achilles Therapeutics PLC or generate 6.06% return on investment over 90 days.

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

Scpharmaceuticals  vs.  Achilles Therapeutics PLC

Scpharmaceuticals

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Scpharmaceuticals has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest uncertain performance, the Stock's basic indicators remain strong and the recent confusion on Wall Street may also be a sign of long-lasting gains for the firm traders.

Achilles Therapeutics PLC

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Achilles Therapeutics PLC are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite quite weak technical indicators, Achilles Therapeutics disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Scpharmaceuticals and Achilles Therapeutics

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

The idea behind Scpharmaceuticals and Achilles Therapeutics PLC 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..