Correlation Between ProMIS Neurosciences and Small Pharma

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

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

Diversification Opportunities for ProMIS Neurosciences and Small Pharma

0.55

Correlation Coefficient

ProMIS Neurosciences  Small Pharma

Very weak diversification

The 3 months correlation between ProMIS and Small is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding ProMIS Neurosciences and Small Pharma in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Small Pharma and ProMIS Neurosciences 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 ProMIS Neurosciences are associated (or correlated) with Small Pharma. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Small Pharma has no effect on the direction of ProMIS Neurosciences i.e., ProMIS Neurosciences and Small Pharma go up and down completely randomly.

Pair Corralation between ProMIS Neurosciences and Small Pharma

If you would invest  97.00  in ProMIS Neurosciences on October 8, 2024 and sell it today you would earn a total of  7.00  from holding ProMIS Neurosciences or generate 7.22% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	5.26%
Values	Daily Returns

ProMIS Neurosciences  vs.  Small Pharma

ProMIS Neurosciences

Risk-Adjusted Performance

1 of 100

Very Weak

Compared to the overall equity markets, risk-adjusted returns on investments in ProMIS Neurosciences are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of very fragile primary indicators, ProMIS Neurosciences may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Small Pharma

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Small Pharma has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Small Pharma is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with ProMIS Neurosciences and Small Pharma

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

The idea behind ProMIS Neurosciences and Small Pharma 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.