Correlation Between Maat Pharma and OSE Pharma

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

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

Diversification Opportunities for Maat Pharma and OSE Pharma

0.07

Correlation Coefficient

Maat Pharma  OSE Pharma

Significant diversification

The 3 months correlation between Maat and OSE is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding Maat Pharma SA and OSE Pharma SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on OSE Pharma SA and Maat Pharma 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 Maat Pharma SA are associated (or correlated) with OSE Pharma. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of OSE Pharma SA has no effect on the direction of Maat Pharma i.e., Maat Pharma and OSE Pharma go up and down completely randomly.

Pair Corralation between Maat Pharma and OSE Pharma

Assuming the 90 days trading horizon Maat Pharma is expected to generate 1.71 times less return on investment than OSE Pharma. But when comparing it to its historical volatility, Maat Pharma SA is 2.22 times less risky than OSE Pharma. It trades about 0.08 of its potential returns per unit of risk. OSE Pharma SA is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  793.00  in OSE Pharma SA on September 3, 2024 and sell it today you would earn a total of  90.00  from holding OSE Pharma SA or generate 11.35% return on investment over 90 days.

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

Maat Pharma SA  vs.  OSE Pharma SA

Maat Pharma SA

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Maat Pharma SA are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Maat Pharma may actually be approaching a critical reversion point that can send shares even higher in January 2025.

OSE Pharma SA

Risk-Adjusted Performance

4 of 100

Insignificant

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

Pair Trading with Maat Pharma and OSE Pharma

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

The idea behind Maat Pharma SA and OSE Pharma SA 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.