Correlation Between Acumen Pharmaceuticals and Centene Corp

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Can any of the company-specific risk be diversified away by investing in both Acumen Pharmaceuticals and Centene Corp 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 Acumen Pharmaceuticals and Centene Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Acumen Pharmaceuticals and Centene Corp, you can compare the effects of market volatilities on Acumen Pharmaceuticals and Centene Corp 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 Acumen Pharmaceuticals with a short position of Centene Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Acumen Pharmaceuticals and Centene Corp.

Diversification Opportunities for Acumen Pharmaceuticals and Centene Corp

-0.42
  Correlation Coefficient

Very good diversification

The 3 months correlation between Acumen and Centene is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding Acumen Pharmaceuticals and Centene Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Centene Corp and Acumen Pharmaceuticals 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 Acumen Pharmaceuticals are associated (or correlated) with Centene Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Centene Corp has no effect on the direction of Acumen Pharmaceuticals i.e., Acumen Pharmaceuticals and Centene Corp go up and down completely randomly.

Pair Corralation between Acumen Pharmaceuticals and Centene Corp

Given the investment horizon of 90 days Acumen Pharmaceuticals is expected to generate 10.45 times more return on investment than Centene Corp. However, Acumen Pharmaceuticals is 10.45 times more volatile than Centene Corp. It trades about 0.17 of its potential returns per unit of risk. Centene Corp is currently generating about -0.17 per unit of risk. If you would invest  608.00  in Acumen Pharmaceuticals on July 7, 2022 and sell it today you would earn a total of  391.00  from holding Acumen Pharmaceuticals or generate 64.31% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthVery Weak
Accuracy100.0%
ValuesDaily Returns

Acumen Pharmaceuticals  vs.  Centene Corp

 Performance (%) 
       Timeline  
Acumen Pharmaceuticals 
Acumen Performance
7 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Acumen Pharmaceuticals are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Even with relatively uncertain basic indicators, Acumen Pharmaceuticals reported solid returns over the last few months and may actually be approaching a breakup point.

Acumen Price Channel

Centene Corp 
Centene Performance
0 of 100
Over the last 90 days Centene Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Centene Corp is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Centene Price Channel

Acumen Pharmaceuticals and Centene Corp Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Acumen Pharmaceuticals and Centene Corp

The main advantage of trading using opposite Acumen Pharmaceuticals and Centene Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Acumen Pharmaceuticals position performs unexpectedly, Centene Corp 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 Centene Corp will offset losses from the drop in Centene Corp's long position.
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The idea behind Acumen Pharmaceuticals and Centene Corp 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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Check out your portfolio center. 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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.

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