Correlation Between Aeterna Zentaris and Pulmatrix

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

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

Diversification Opportunities for Aeterna Zentaris and Pulmatrix

-0.4

Correlation Coefficient

Aeterna Zentaris  Pulmatrix

Very good diversification

The 3 months correlation between Aeterna and Pulmatrix is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding Aeterna Zentaris and Pulmatrix in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pulmatrix and Aeterna Zentaris 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 Aeterna Zentaris are associated (or correlated) with Pulmatrix. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pulmatrix has no effect on the direction of Aeterna Zentaris i.e., Aeterna Zentaris and Pulmatrix go up and down completely randomly.

Pair Corralation between Aeterna Zentaris and Pulmatrix

If you would invest  212.00  in Pulmatrix on September 18, 2024 and sell it today you would earn a total of  405.00  from holding Pulmatrix or generate 191.04% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	1.56%
Values	Daily Returns

Aeterna Zentaris  vs.  Pulmatrix

Aeterna Zentaris

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Aeterna Zentaris has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Aeterna Zentaris is not utilizing all of its potentials. The recent stock price uproar, may contribute to short-horizon losses for the private investors.

Pulmatrix

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Pulmatrix are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of very uncertain essential indicators, Pulmatrix displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Aeterna Zentaris and Pulmatrix

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

The idea behind Aeterna Zentaris and Pulmatrix 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.

Check out your portfolio center.

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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.