Correlation Between Veru and Armata Pharmaceuticals

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

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

Diversification Opportunities for Veru and Armata Pharmaceuticals

-0.8

Correlation Coefficient

Veru  Armata Pharmaceuticals

Pay attention - limited upside

The 3 months correlation between Veru and Armata is -0.8. Overlapping area represents the amount of risk that can be diversified away by holding Veru Inc and Armata Pharmaceuticals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Armata Pharmaceuticals and Veru 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 Veru Inc are associated (or correlated) with Armata Pharmaceuticals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Armata Pharmaceuticals has no effect on the direction of Veru i.e., Veru and Armata Pharmaceuticals go up and down completely randomly.

Pair Corralation between Veru and Armata Pharmaceuticals

Given the investment horizon of 90 days Veru Inc is expected to generate 1.57 times more return on investment than Armata Pharmaceuticals. However, Veru is 1.57 times more volatile than Armata Pharmaceuticals. It trades about 0.11 of its potential returns per unit of risk. Armata Pharmaceuticals is currently generating about -0.08 per unit of risk. If you would invest  64.00  in Veru Inc on March 3, 2024 and sell it today you would earn a total of  33.00  from holding Veru Inc or generate 51.56% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

Veru Inc  vs.  Armata Pharmaceuticals

Veru Inc

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Veru Inc are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, Veru unveiled solid returns over the last few months and may actually be approaching a breakup point.

Armata Pharmaceuticals

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Armata Pharmaceuticals has generated negative risk-adjusted returns adding no value to investors with long positions. Even with weak performance in the last few months, the Stock's primary indicators remain relatively invariable which may send shares a bit higher in July 2024. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Pair Trading with Veru and Armata Pharmaceuticals

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

The idea behind Veru Inc and Armata Pharmaceuticals 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.