Correlation Between PURETECH HEALTH and Aurubis AG

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

Diversification Opportunities for PURETECH HEALTH and Aurubis AG

0.72

Correlation Coefficient

PURETECH HEALTH  Aurubis AG

Poor diversification

The 3 months correlation between PURETECH and Aurubis is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding PURETECH HEALTH PLC and Aurubis AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aurubis AG 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 Aurubis AG. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aurubis AG has no effect on the direction of PURETECH HEALTH i.e., PURETECH HEALTH and Aurubis AG go up and down completely randomly.

Pair Corralation between PURETECH HEALTH and Aurubis AG

Assuming the 90 days horizon PURETECH HEALTH PLC is expected to under-perform the Aurubis AG. In addition to that, PURETECH HEALTH is 1.32 times more volatile than Aurubis AG. It trades about 0.0 of its total potential returns per unit of risk. Aurubis AG is currently generating about 0.15 per unit of volatility. If you would invest  6,335  in Aurubis AG on October 9, 2024 and sell it today you would earn a total of  1,400  from holding Aurubis AG or generate 22.1% return on investment over 90 days.

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

PURETECH HEALTH PLC  vs.  Aurubis AG

PURETECH HEALTH PLC

Risk-Adjusted Performance

0 of 100

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 nearly stable basic indicators, PURETECH HEALTH is not utilizing all of its potentials. The recent stock price disturbance, may contribute to mid-run losses for the stockholders.

Aurubis AG

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Aurubis AG are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, Aurubis AG reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with PURETECH HEALTH and Aurubis AG

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

The idea behind PURETECH HEALTH PLC and Aurubis AG 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.