Correlation Between Penumbra and Pressure Biosciences

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

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

Diversification Opportunities for Penumbra and Pressure Biosciences

-0.85

Correlation Coefficient

Penumbra  Pressure Biosciences

Pay attention - limited upside

The 3 months correlation between Penumbra and Pressure is -0.85. Overlapping area represents the amount of risk that can be diversified away by holding Penumbra and Pressure Biosciences in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pressure Biosciences and Penumbra 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 Penumbra are associated (or correlated) with Pressure Biosciences. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pressure Biosciences has no effect on the direction of Penumbra i.e., Penumbra and Pressure Biosciences go up and down completely randomly.

Pair Corralation between Penumbra and Pressure Biosciences

If you would invest  24,048  in Penumbra on September 17, 2024 and sell it today you would earn a total of  843.50  from holding Penumbra or generate 3.51% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Significant
Accuracy	4.76%
Values	Daily Returns

Penumbra  vs.  Pressure Biosciences

Penumbra

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Penumbra are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. In spite of very weak technical and fundamental indicators, Penumbra displayed solid returns over the last few months and may actually be approaching a breakup point.

Pressure Biosciences

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Penumbra and Pressure Biosciences

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

The idea behind Penumbra and Pressure Biosciences 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.