Correlation Between Acasti Pharma and Centene Corp

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

Diversification Opportunities for Acasti Pharma and Centene Corp

-0.61
  Correlation Coefficient

Excellent diversification

The 24 months correlation between Acasti and Centene is -0.61. Overlapping area represents the amount of risk that can be diversified away by holding Acasti Pharma and Centene Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Centene Corp and Acasti Pharma 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 Acasti Pharma 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 Acasti Pharma i.e., Acasti Pharma and Centene Corp go up and down completely randomly.

Pair Corralation between Acasti Pharma and Centene Corp

Given the investment horizon of 90 days Acasti Pharma is expected to under-perform the Centene Corp. In addition to that, Acasti Pharma is 1.51 times more volatile than Centene Corp. It trades about -0.49 of its total potential returns per unit of risk. Centene Corp is currently generating about -0.33 per unit of volatility. If you would invest  9,144  in Centene Corp on June 28, 2022 and sell it today you would lose (1,273)  from holding Centene Corp or give up 13.92% of portfolio value over 90 days.
Time Period24 Months [change]
DirectionMoves Against 
StrengthWeak
Accuracy100.0%
ValuesDaily Returns

Acasti Pharma  vs.  Centene Corp

 Performance (%) 
       Timeline  
Acasti Pharma 
Acasti Performance
0 of 100
Over the last 90 days Acasti Pharma has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Acasti Pharma is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Acasti Price Channel

Centene Corp 
Centene Performance
2 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Centene Corp are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. 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

Acasti Pharma and Centene Corp Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Acasti Pharma and Centene Corp

The main advantage of trading using opposite Acasti Pharma and Centene Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Acasti Pharma 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 Acasti Pharma 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.

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