Correlation Between GH Research and Pulmatrix

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

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

Diversification Opportunities for GH Research and Pulmatrix

0.68

Correlation Coefficient

GH Research  Pulmatrix

Poor diversification

The 3 months correlation between GHRS and Pulmatrix is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding GH Research PLC and Pulmatrix in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pulmatrix and GH Research 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 GH Research PLC are associated (or correlated) with Pulmatrix. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pulmatrix has no effect on the direction of GH Research i.e., GH Research and Pulmatrix go up and down completely randomly.

Pair Corralation between GH Research and Pulmatrix

Given the investment horizon of 90 days GH Research PLC is expected to under-perform the Pulmatrix. But the stock apears to be less risky and, when comparing its historical volatility, GH Research PLC is 1.97 times less risky than Pulmatrix. The stock trades about -0.64 of its potential returns per unit of risk. The Pulmatrix is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  750.00  in Pulmatrix on December 3, 2024 and sell it today you would earn a total of  58.00  from holding Pulmatrix or generate 7.73% return on investment over 90 days.

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

GH Research PLC  vs.  Pulmatrix

GH Research PLC

Risk-Adjusted Performance

Modest

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

Pulmatrix

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Pulmatrix are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of very weak essential indicators, Pulmatrix displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with GH Research and Pulmatrix

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

The idea behind GH Research PLC and Pulmatrix 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.