Correlation Between GeoVax Labs and Protara Therapeutics

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

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

Diversification Opportunities for GeoVax Labs and Protara Therapeutics

0.09

Correlation Coefficient

GeoVax Labs  Protara Therapeutics

Significant diversification

The 3 months correlation between GeoVax and Protara is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding GeoVax Labs and Protara Therapeutics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Protara Therapeutics and GeoVax Labs 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 GeoVax Labs are associated (or correlated) with Protara Therapeutics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Protara Therapeutics has no effect on the direction of GeoVax Labs i.e., GeoVax Labs and Protara Therapeutics go up and down completely randomly.

Pair Corralation between GeoVax Labs and Protara Therapeutics

Given the investment horizon of 90 days GeoVax Labs is expected to under-perform the Protara Therapeutics. But the stock apears to be less risky and, when comparing its historical volatility, GeoVax Labs is 3.52 times less risky than Protara Therapeutics. The stock trades about -0.22 of its potential returns per unit of risk. The Protara Therapeutics is currently generating about 0.29 of returns per unit of risk over similar time horizon. If you would invest  239.00  in Protara Therapeutics on September 23, 2024 and sell it today you would earn a total of  300.00  from holding Protara Therapeutics or generate 125.52% return on investment over 90 days.

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

GeoVax Labs  vs.  Protara Therapeutics

GeoVax Labs

Risk-Adjusted Performance

0 of 100

Weak

Over the last 90 days GeoVax Labs has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly unsteady basic indicators, GeoVax Labs may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Protara Therapeutics

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Protara Therapeutics are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Protara Therapeutics sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with GeoVax Labs and Protara Therapeutics

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

The idea behind GeoVax Labs and Protara Therapeutics 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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.