Correlation Between Implenia and Santhera Pharmaceuticals

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

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

Diversification Opportunities for Implenia and Santhera Pharmaceuticals

0.67

Correlation Coefficient

Implenia  Santhera Pharmaceuticals

Poor diversification

The 3 months correlation between Implenia and Santhera is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Implenia AG and Santhera Pharmaceuticals Holdi in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Santhera Pharmaceuticals and Implenia 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 Implenia AG are associated (or correlated) with Santhera Pharmaceuticals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Santhera Pharmaceuticals has no effect on the direction of Implenia i.e., Implenia and Santhera Pharmaceuticals go up and down completely randomly.

Pair Corralation between Implenia and Santhera Pharmaceuticals

Assuming the 90 days trading horizon Implenia AG is expected to generate 0.59 times more return on investment than Santhera Pharmaceuticals. However, Implenia AG is 1.68 times less risky than Santhera Pharmaceuticals. It trades about 0.02 of its potential returns per unit of risk. Santhera Pharmaceuticals Holding is currently generating about 0.01 per unit of risk. If you would invest  3,020  in Implenia AG on September 16, 2024 and sell it today you would earn a total of  30.00  from holding Implenia AG or generate 0.99% return on investment over 90 days.

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

Implenia AG  vs.  Santhera Pharmaceuticals Holdi

Implenia AG

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Implenia AG are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, Implenia is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Santhera Pharmaceuticals

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Santhera Pharmaceuticals Holding has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Santhera Pharmaceuticals is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Implenia and Santhera Pharmaceuticals

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

The idea behind Implenia AG and Santhera Pharmaceuticals Holding 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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.