Correlation Between Energy Focu and Petros Pharmaceuticals

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

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

Diversification Opportunities for Energy Focu and Petros Pharmaceuticals

-0.25

Correlation Coefficient

Energy Focu  Petros Pharmaceuticals

Very good diversification

The 3 months correlation between Energy and Petros is -0.25. Overlapping area represents the amount of risk that can be diversified away by holding Energy Focu and Petros Pharmaceuticals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Petros Pharmaceuticals and Energy Focu 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 Energy Focu are associated (or correlated) with Petros Pharmaceuticals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Petros Pharmaceuticals has no effect on the direction of Energy Focu i.e., Energy Focu and Petros Pharmaceuticals go up and down completely randomly.

Pair Corralation between Energy Focu and Petros Pharmaceuticals

Given the investment horizon of 90 days Energy Focu is expected to under-perform the Petros Pharmaceuticals. But the stock apears to be less risky and, when comparing its historical volatility, Energy Focu is 8.57 times less risky than Petros Pharmaceuticals. The stock trades about -0.16 of its potential returns per unit of risk. The Petros Pharmaceuticals is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  36.00  in Petros Pharmaceuticals on October 9, 2024 and sell it today you would earn a total of  5.00  from holding Petros Pharmaceuticals or generate 13.89% return on investment over 90 days.

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

Energy Focu  vs.  Petros Pharmaceuticals

Energy Focu

Risk-Adjusted Performance

0 of 100

Weak

Over the last 90 days Energy Focu has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong basic indicators, Energy Focu is not utilizing all of its potentials. The current stock price confusion, may contribute to short-horizon losses for the traders.

Petros Pharmaceuticals

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Petros Pharmaceuticals are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite fairly unfluctuating basic indicators, Petros Pharmaceuticals demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Energy Focu and Petros Pharmaceuticals

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

The idea behind Energy Focu and Petros Pharmaceuticals 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.