Correlation Between PURETECH HEALTH and Elis SA

Can any of the company-specific risk be diversified away by investing in both PURETECH HEALTH and Elis SA 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 Elis SA 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 Elis SA, you can compare the effects of market volatilities on PURETECH HEALTH and Elis SA 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 Elis SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of PURETECH HEALTH and Elis SA.

Diversification Opportunities for PURETECH HEALTH and Elis SA

-0.62

Correlation Coefficient

PURETECH HEALTH  Elis SA

Excellent diversification

The 3 months correlation between PURETECH and Elis is -0.62. Overlapping area represents the amount of risk that can be diversified away by holding PURETECH HEALTH PLC and Elis SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Elis SA 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 Elis SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Elis SA has no effect on the direction of PURETECH HEALTH i.e., PURETECH HEALTH and Elis SA go up and down completely randomly.

Pair Corralation between PURETECH HEALTH and Elis SA

Assuming the 90 days horizon PURETECH HEALTH PLC is expected to under-perform the Elis SA. In addition to that, PURETECH HEALTH is 1.58 times more volatile than Elis SA. It trades about -0.12 of its total potential returns per unit of risk. Elis SA is currently generating about 0.16 per unit of volatility. If you would invest  1,873  in Elis SA on December 19, 2024 and sell it today you would earn a total of  343.00  from holding Elis SA or generate 18.31% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	98.33%
Values	Daily Returns

PURETECH HEALTH PLC  vs.  Elis SA

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 uncertain 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.

Elis SA

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Elis SA are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite nearly unsteady basic indicators, Elis SA reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with PURETECH HEALTH and Elis SA

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

The idea behind PURETECH HEALTH PLC and Elis SA 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.