Correlation Between Monopar Therapeutics and Pasithea Therapeutics

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

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

Diversification Opportunities for Monopar Therapeutics and Pasithea Therapeutics

-0.31

Correlation Coefficient

Monopar Therapeutics  Pasithea Therapeutics

Very good diversification

The 3 months correlation between Monopar and Pasithea is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding Monopar Therapeutics and Pasithea Therapeutics Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pasithea Therapeutics and Monopar 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 Monopar Therapeutics are associated (or correlated) with Pasithea Therapeutics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pasithea Therapeutics has no effect on the direction of Monopar Therapeutics i.e., Monopar Therapeutics and Pasithea Therapeutics go up and down completely randomly.

Pair Corralation between Monopar Therapeutics and Pasithea Therapeutics

Given the investment horizon of 90 days Monopar Therapeutics is expected to generate 1.08 times more return on investment than Pasithea Therapeutics. However, Monopar Therapeutics is 1.08 times more volatile than Pasithea Therapeutics Corp. It trades about 0.14 of its potential returns per unit of risk. Pasithea Therapeutics Corp is currently generating about -0.13 per unit of risk. If you would invest  2,385  in Monopar Therapeutics on December 29, 2024 and sell it today you would earn a total of  1,648  from holding Monopar Therapeutics or generate 69.1% return on investment over 90 days.

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

Monopar Therapeutics  vs.  Pasithea Therapeutics Corp

Monopar Therapeutics

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Monopar Therapeutics are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Monopar Therapeutics reported solid returns over the last few months and may actually be approaching a breakup point.

Pasithea Therapeutics

Risk-Adjusted Performance

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 April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Monopar Therapeutics and Pasithea Therapeutics

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

The idea behind Monopar Therapeutics and Pasithea Therapeutics Corp 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.