Correlation Between Certara and Phreesia

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

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

Diversification Opportunities for Certara and Phreesia

0.76

Correlation Coefficient

Certara  Phreesia

Poor diversification

The 3 months correlation between Certara and Phreesia is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Certara and Phreesia in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Phreesia and Certara 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 Certara are associated (or correlated) with Phreesia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Phreesia has no effect on the direction of Certara i.e., Certara and Phreesia go up and down completely randomly.

Pair Corralation between Certara and Phreesia

Given the investment horizon of 90 days Certara is expected to under-perform the Phreesia. But the stock apears to be less risky and, when comparing its historical volatility, Certara is 1.24 times less risky than Phreesia. The stock trades about -0.16 of its potential returns per unit of risk. The Phreesia is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  2,698  in Phreesia on November 28, 2024 and sell it today you would earn a total of  2.00  from holding Phreesia or generate 0.07% return on investment over 90 days.

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

Certara  vs.  Phreesia

Certara

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Certara are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady basic indicators, Certara unveiled solid returns over the last few months and may actually be approaching a breakup point.

Phreesia

Risk-Adjusted Performance

Good

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

Pair Trading with Certara and Phreesia

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

The idea behind Certara and Phreesia 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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.