Correlation Between EcoSynthetix and Theratechnologies

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

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

Diversification Opportunities for EcoSynthetix and Theratechnologies

-0.11

Correlation Coefficient

EcoSynthetix  Theratechnologies

Good diversification

The 3 months correlation between EcoSynthetix and Theratechnologies is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding EcoSynthetix and Theratechnologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Theratechnologies and EcoSynthetix 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 EcoSynthetix are associated (or correlated) with Theratechnologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Theratechnologies has no effect on the direction of EcoSynthetix i.e., EcoSynthetix and Theratechnologies go up and down completely randomly.

Pair Corralation between EcoSynthetix and Theratechnologies

Assuming the 90 days trading horizon EcoSynthetix is expected to generate 0.46 times more return on investment than Theratechnologies. However, EcoSynthetix is 2.15 times less risky than Theratechnologies. It trades about 0.02 of its potential returns per unit of risk. Theratechnologies is currently generating about 0.01 per unit of risk. If you would invest  375.00  in EcoSynthetix on October 5, 2024 and sell it today you would earn a total of  46.00  from holding EcoSynthetix or generate 12.27% return on investment over 90 days.

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

EcoSynthetix  vs.  Theratechnologies

EcoSynthetix

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days EcoSynthetix has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's basic indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Theratechnologies

Risk-Adjusted Performance

19 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Theratechnologies are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. In spite of very weak basic indicators, Theratechnologies displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with EcoSynthetix and Theratechnologies

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

The idea behind EcoSynthetix and Theratechnologies 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.