Correlation Between Pasithea Therapeutics and Biophytis

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

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

Diversification Opportunities for Pasithea Therapeutics and Biophytis

0.83

Correlation Coefficient

Pasithea Therapeutics  Biophytis

Very poor diversification

The 3 months correlation between Pasithea and Biophytis is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Pasithea Therapeutics Corp and Biophytis in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Biophytis and Pasithea Therapeutics 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 Pasithea Therapeutics Corp are associated (or correlated) with Biophytis. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Biophytis has no effect on the direction of Pasithea Therapeutics i.e., Pasithea Therapeutics and Biophytis go up and down completely randomly.

Pair Corralation between Pasithea Therapeutics and Biophytis

Given the investment horizon of 90 days Pasithea Therapeutics Corp is expected to generate 0.8 times more return on investment than Biophytis. However, Pasithea Therapeutics Corp is 1.26 times less risky than Biophytis. It trades about -0.05 of its potential returns per unit of risk. Biophytis is currently generating about -0.11 per unit of risk. If you would invest  866.00  in Pasithea Therapeutics Corp on September 20, 2024 and sell it today you would lose (612.00) from holding Pasithea Therapeutics Corp or give up 70.67% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	51.82%
Values	Daily Returns

Pasithea Therapeutics Corp  vs.  Biophytis

Pasithea Therapeutics

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Pasithea Therapeutics Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite abnormal performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Biophytis

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Biophytis has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Biophytis is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Pasithea Therapeutics and Biophytis

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

The idea behind Pasithea Therapeutics Corp and Biophytis 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.