Correlation Between PharmChem and Grey Cloak

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

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

Diversification Opportunities for PharmChem and Grey Cloak

0.37

Correlation Coefficient

PharmChem  Grey Cloak

Weak diversification

The 3 months correlation between PharmChem and Grey is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding PharmChem and Grey Cloak Tech in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Grey Cloak Tech and PharmChem 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 PharmChem are associated (or correlated) with Grey Cloak. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Grey Cloak Tech has no effect on the direction of PharmChem i.e., PharmChem and Grey Cloak go up and down completely randomly.

Pair Corralation between PharmChem and Grey Cloak

Given the investment horizon of 90 days PharmChem is expected to under-perform the Grey Cloak. But the pink sheet apears to be less risky and, when comparing its historical volatility, PharmChem is 8.03 times less risky than Grey Cloak. The pink sheet trades about -0.17 of its potential returns per unit of risk. The Grey Cloak Tech is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  225.00  in Grey Cloak Tech on September 22, 2024 and sell it today you would earn a total of  27.00  from holding Grey Cloak Tech or generate 12.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	95.45%
Values	Daily Returns

PharmChem  vs.  Grey Cloak Tech

PharmChem

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days PharmChem has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy technical indicators, PharmChem is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Grey Cloak Tech

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Grey Cloak Tech are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of fairly inconsistent technical and fundamental indicators, Grey Cloak showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with PharmChem and Grey Cloak

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

The idea behind PharmChem and Grey Cloak Tech 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.