Correlation Between Aldeyra and Acasti Pharma

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

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

Diversification Opportunities for Aldeyra and Acasti Pharma

-0.26

Correlation Coefficient

Aldeyra  Acasti Pharma

Very good diversification

The 3 months correlation between Aldeyra and Acasti is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding Aldeyra and Acasti Pharma in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Acasti Pharma and Aldeyra 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 Aldeyra are associated (or correlated) with Acasti Pharma. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Acasti Pharma has no effect on the direction of Aldeyra i.e., Aldeyra and Acasti Pharma go up and down completely randomly.

Pair Corralation between Aldeyra and Acasti Pharma

Given the investment horizon of 90 days Aldeyra is expected to generate 1.13 times more return on investment than Acasti Pharma. However, Aldeyra is 1.13 times more volatile than Acasti Pharma. It trades about 0.05 of its potential returns per unit of risk. Acasti Pharma is currently generating about -0.18 per unit of risk. If you would invest  397.00  in Aldeyra on February 17, 2024 and sell it today you would earn a total of  12.00  from holding Aldeyra or generate 3.02% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	95.65%
Values	Daily Returns

Aldeyra  vs.  Acasti Pharma

Aldeyra

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Aldeyra are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of fairly uncertain fundamental indicators, Aldeyra showed solid returns over the last few months and may actually be approaching a breakup point.

Acasti Pharma

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Acasti Pharma has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with Aldeyra and Acasti Pharma

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

The idea behind Aldeyra and Acasti Pharma 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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.