Correlation Between PURETECH HEALTH and NEW PACIFIC

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

By analyzing existing cross correlation between PURETECH HEALTH PLC and NEW PACIFIC METALS, you can compare the effects of market volatilities on PURETECH HEALTH and NEW PACIFIC 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 PURETECH HEALTH with a short position of NEW PACIFIC. Check out your portfolio center. Please also check ongoing floating volatility patterns of PURETECH HEALTH and NEW PACIFIC.

Diversification Opportunities for PURETECH HEALTH and NEW PACIFIC

-0.01

Correlation Coefficient

PURETECH HEALTH  NEW PACIFIC

Good diversification

The 3 months correlation between PURETECH and NEW is -0.01. Overlapping area represents the amount of risk that can be diversified away by holding PURETECH HEALTH PLC and NEW PACIFIC METALS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NEW PACIFIC METALS and PURETECH HEALTH 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 PURETECH HEALTH PLC are associated (or correlated) with NEW PACIFIC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NEW PACIFIC METALS has no effect on the direction of PURETECH HEALTH i.e., PURETECH HEALTH and NEW PACIFIC go up and down completely randomly.

Pair Corralation between PURETECH HEALTH and NEW PACIFIC

Assuming the 90 days horizon PURETECH HEALTH PLC is expected to under-perform the NEW PACIFIC. But the stock apears to be less risky and, when comparing its historical volatility, PURETECH HEALTH PLC is 2.14 times less risky than NEW PACIFIC. The stock trades about -0.1 of its potential returns per unit of risk. The NEW PACIFIC METALS is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  114.00  in NEW PACIFIC METALS on December 21, 2024 and sell it today you would earn a total of  3.00  from holding NEW PACIFIC METALS or generate 2.63% return on investment over 90 days.

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

PURETECH HEALTH PLC  vs.  NEW PACIFIC METALS

PURETECH HEALTH PLC

Risk-Adjusted Performance

Very Weak

Over the last 90 days PURETECH HEALTH PLC has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

NEW PACIFIC METALS

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in NEW PACIFIC METALS are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, NEW PACIFIC reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with PURETECH HEALTH and NEW PACIFIC

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

The idea behind PURETECH HEALTH PLC and NEW PACIFIC METALS 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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.