Correlation Between Acura Pharma and Chembio Diagnostics

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

Diversification Opportunities for Acura Pharma and Chembio Diagnostics

0.24
  Correlation Coefficient

Modest diversification

The 3 months correlation between Acura and Chembio is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding Acura Pharma Cmn and Chembio Diagnostics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chembio Diagnostics and Acura 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 Acura Pharma Cmn are associated (or correlated) with Chembio Diagnostics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chembio Diagnostics has no effect on the direction of Acura Pharma i.e., Acura Pharma and Chembio Diagnostics go up and down completely randomly.

Pair Corralation between Acura Pharma and Chembio Diagnostics

Given the investment horizon of 90 days Acura Pharma Cmn is expected to generate 1.15 times more return on investment than Chembio Diagnostics. However, Acura Pharma is 1.15 times more volatile than Chembio Diagnostics. It trades about 0.01 of its potential returns per unit of risk. Chembio Diagnostics is currently generating about -0.02 per unit of risk. If you would invest  29.00  in Acura Pharma Cmn on June 29, 2022 and sell it today you would lose (28.00)  from holding Acura Pharma Cmn or give up 96.55% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Weak
Accuracy99.79%
ValuesDaily Returns

Acura Pharma Cmn  vs.  Chembio Diagnostics

 Performance (%) 
       Timeline  
Acura Pharma Cmn 
Acura Performance
0 of 100
Over the last 90 days Acura Pharma Cmn has generated negative risk-adjusted returns adding no value to investors with long positions. Even with abnormal performance in the last few months, the Stock's basic indicators remain relatively invariable which may send shares a bit higher in October 2022. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Acura Price Channel

Chembio Diagnostics 
Chembio Performance
0 of 100
Over the last 90 days Chembio Diagnostics has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's primary indicators remain nearly stable which may send shares a bit higher in October 2022. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Chembio Price Channel

Acura Pharma and Chembio Diagnostics Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Acura Pharma and Chembio Diagnostics

The main advantage of trading using opposite Acura Pharma and Chembio Diagnostics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Acura Pharma position performs unexpectedly, Chembio Diagnostics 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 Chembio Diagnostics will offset losses from the drop in Chembio Diagnostics' long position.
Acura Pharma vs. Clearwater Paper Corp
The idea behind Acura Pharma Cmn and Chembio Diagnostics 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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.

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