Correlation Between ANI Pharmaceuticals and Procaps Group

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

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

Diversification Opportunities for ANI Pharmaceuticals and Procaps Group

-0.58

Correlation Coefficient

ANI Pharmaceuticals  Procaps Group

Excellent diversification

The 3 months correlation between ANI and Procaps is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding ANI Pharmaceuticals and Procaps Group SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Procaps Group SA and ANI Pharmaceuticals 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 ANI Pharmaceuticals are associated (or correlated) with Procaps Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Procaps Group SA has no effect on the direction of ANI Pharmaceuticals i.e., ANI Pharmaceuticals and Procaps Group go up and down completely randomly.

Pair Corralation between ANI Pharmaceuticals and Procaps Group

Given the investment horizon of 90 days ANI Pharmaceuticals is expected to generate 0.17 times more return on investment than Procaps Group. However, ANI Pharmaceuticals is 6.01 times less risky than Procaps Group. It trades about 0.16 of its potential returns per unit of risk. Procaps Group SA is currently generating about 0.01 per unit of risk. If you would invest  5,421  in ANI Pharmaceuticals on December 28, 2024 and sell it today you would earn a total of  1,415  from holding ANI Pharmaceuticals or generate 26.1% return on investment over 90 days.

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

ANI Pharmaceuticals  vs.  Procaps Group SA

ANI Pharmaceuticals

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in ANI Pharmaceuticals are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak forward indicators, ANI Pharmaceuticals reported solid returns over the last few months and may actually be approaching a breakup point.

Procaps Group SA

Risk-Adjusted Performance

Very Weak

Over the last 90 days Procaps Group SA has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather weak basic indicators, Procaps Group may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with ANI Pharmaceuticals and Procaps Group

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

The idea behind ANI Pharmaceuticals and Procaps Group 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.