Correlation Between Fortress Biotech and PreveCeutical Medical

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

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

Diversification Opportunities for Fortress Biotech and PreveCeutical Medical

0.04

Correlation Coefficient

Fortress Biotech  PreveCeutical Medical

Significant diversification

The 3 months correlation between Fortress and PreveCeutical is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding Fortress Biotech Pref and PreveCeutical Medical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PreveCeutical Medical and Fortress Biotech 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 Fortress Biotech Pref are associated (or correlated) with PreveCeutical Medical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PreveCeutical Medical has no effect on the direction of Fortress Biotech i.e., Fortress Biotech and PreveCeutical Medical go up and down completely randomly.

Pair Corralation between Fortress Biotech and PreveCeutical Medical

Assuming the 90 days horizon Fortress Biotech is expected to generate 8.68 times less return on investment than PreveCeutical Medical. But when comparing it to its historical volatility, Fortress Biotech Pref is 4.57 times less risky than PreveCeutical Medical. It trades about 0.03 of its potential returns per unit of risk. PreveCeutical Medical is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  1.79  in PreveCeutical Medical on December 22, 2024 and sell it today you would lose (0.10) from holding PreveCeutical Medical or give up 5.59% of portfolio value over 90 days.

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

Fortress Biotech Pref  vs.  PreveCeutical Medical

Fortress Biotech Pref

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Fortress Biotech Pref are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable basic indicators, Fortress Biotech is not utilizing all of its potentials. The newest stock price agitation, may contribute to short-term losses for the retail investors.

PreveCeutical Medical

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in PreveCeutical Medical are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak fundamental indicators, PreveCeutical Medical reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Fortress Biotech and PreveCeutical Medical

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

The idea behind Fortress Biotech Pref and PreveCeutical Medical 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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.