Correlation Between Pulmatrix and PTC Therapeutics
Can any of the company-specific risk be diversified away by investing in both Pulmatrix and PTC 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 Pulmatrix and PTC Therapeutics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Pulmatrix and PTC Therapeutics, you can compare the effects of market volatilities on Pulmatrix and PTC 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 Pulmatrix with a short position of PTC Therapeutics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pulmatrix and PTC Therapeutics.
Diversification Opportunities for Pulmatrix and PTC Therapeutics
-0.26 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Pulmatrix and PTC is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding Pulmatrix and PTC Therapeutics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PTC Therapeutics and Pulmatrix 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 Pulmatrix are associated (or correlated) with PTC Therapeutics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PTC Therapeutics has no effect on the direction of Pulmatrix i.e., Pulmatrix and PTC Therapeutics go up and down completely randomly.
Pair Corralation between Pulmatrix and PTC Therapeutics
Given the investment horizon of 90 days Pulmatrix is expected to under-perform the PTC Therapeutics. But the stock apears to be less risky and, when comparing its historical volatility, Pulmatrix is 1.2 times less risky than PTC Therapeutics. The stock trades about -0.05 of its potential returns per unit of risk. The PTC Therapeutics is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 2,937 in PTC Therapeutics on February 20, 2024 and sell it today you would earn a total of 1,075 from holding PTC Therapeutics or generate 36.6% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
Pulmatrix vs. PTC Therapeutics
Performance |
Timeline |
Pulmatrix |
PTC Therapeutics |
Pulmatrix and PTC Therapeutics Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Pulmatrix and PTC Therapeutics
The main advantage of trading using opposite Pulmatrix and PTC Therapeutics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pulmatrix position performs unexpectedly, PTC 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 PTC Therapeutics will offset losses from the drop in PTC Therapeutics' long position.Pulmatrix vs. International Growth Fund | Pulmatrix vs. MIRA Pharmaceuticals Common | Pulmatrix vs. Fidelity Water Sustainability | Pulmatrix vs. Merck Company |
PTC Therapeutics vs. International Growth Fund | PTC Therapeutics vs. MIRA Pharmaceuticals Common | PTC Therapeutics vs. Fidelity Water Sustainability | PTC Therapeutics vs. Merck Company |
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 the Equity Valuation module to check real value of public entities based on technical and fundamental data.
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