Correlation Between Processa Pharmaceuticals and Axcella Health

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

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

Diversification Opportunities for Processa Pharmaceuticals and Axcella Health

0.0

Correlation Coefficient

Processa Pharmaceuticals  Axcella Health

Pay attention - limited upside

The 3 months correlation between Processa and Axcella is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Processa Pharmaceuticals and Axcella Health in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Axcella Health and Processa Pharmaceuticals 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 Processa Pharmaceuticals are associated (or correlated) with Axcella Health. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Axcella Health has no effect on the direction of Processa Pharmaceuticals i.e., Processa Pharmaceuticals and Axcella Health go up and down completely randomly.

Pair Corralation between Processa Pharmaceuticals and Axcella Health

If you would invest (100.00) in Axcella Health on December 29, 2024 and sell it today you would earn a total of  100.00  from holding Axcella Health or generate -100.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Processa Pharmaceuticals  vs.  Axcella Health

Processa Pharmaceuticals

Risk-Adjusted Performance

Very Weak

Over the last 90 days Processa Pharmaceuticals has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile 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.

Axcella Health

Risk-Adjusted Performance

Very Weak

Over the last 90 days Axcella Health has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong essential indicators, Axcella Health is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Processa Pharmaceuticals and Axcella Health

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

The idea behind Processa Pharmaceuticals and Axcella Health 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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.