Correlation Between PURETECH HEALTH and CODERE ONLINE

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

Diversification Opportunities for PURETECH HEALTH and CODERE ONLINE

0.22

Correlation Coefficient

PURETECH HEALTH  CODERE ONLINE

Modest diversification

The 3 months correlation between PURETECH and CODERE is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding PURETECH HEALTH PLC and CODERE ONLINE LUX in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CODERE ONLINE LUX 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 CODERE ONLINE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CODERE ONLINE LUX has no effect on the direction of PURETECH HEALTH i.e., PURETECH HEALTH and CODERE ONLINE go up and down completely randomly.

Pair Corralation between PURETECH HEALTH and CODERE ONLINE

Assuming the 90 days horizon PURETECH HEALTH PLC is expected to under-perform the CODERE ONLINE. In addition to that, PURETECH HEALTH is 1.02 times more volatile than CODERE ONLINE LUX. It trades about -0.1 of its total potential returns per unit of risk. CODERE ONLINE LUX is currently generating about -0.03 per unit of volatility. If you would invest  690.00  in CODERE ONLINE LUX on December 21, 2024 and sell it today you would lose (50.00) from holding CODERE ONLINE LUX or give up 7.25% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

PURETECH HEALTH PLC  vs.  CODERE ONLINE LUX

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 unsteady 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.

CODERE ONLINE LUX

Risk-Adjusted Performance

Very Weak

Over the last 90 days CODERE ONLINE LUX has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, CODERE ONLINE is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with PURETECH HEALTH and CODERE ONLINE

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

The idea behind PURETECH HEALTH PLC and CODERE ONLINE LUX 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..