Correlation Between ProMIS Neurosciences and Gain Therapeutics

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

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

Diversification Opportunities for ProMIS Neurosciences and Gain Therapeutics

0.22

Correlation Coefficient

ProMIS Neurosciences  Gain Therapeutics

Modest diversification

The 3 months correlation between ProMIS and Gain is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding ProMIS Neurosciences and Gain Therapeutics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gain Therapeutics 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 Gain Therapeutics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gain Therapeutics has no effect on the direction of ProMIS Neurosciences i.e., ProMIS Neurosciences and Gain Therapeutics go up and down completely randomly.

Pair Corralation between ProMIS Neurosciences and Gain Therapeutics

Considering the 90-day investment horizon ProMIS Neurosciences is expected to under-perform the Gain Therapeutics. But the stock apears to be less risky and, when comparing its historical volatility, ProMIS Neurosciences is 1.49 times less risky than Gain Therapeutics. The stock trades about -0.1 of its potential returns per unit of risk. The Gain Therapeutics is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest  156.00  in Gain Therapeutics on December 20, 2024 and sell it today you would earn a total of  91.00  from holding Gain Therapeutics or generate 58.33% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

ProMIS Neurosciences  vs.  Gain Therapeutics

ProMIS Neurosciences

Risk-Adjusted Performance

Very Weak

Over the last 90 days ProMIS Neurosciences has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fragile performance in the last few months, the Stock's primary indicators remain very healthy which may send shares a bit higher in April 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Gain Therapeutics

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Gain Therapeutics are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of fairly inconsistent basic indicators, Gain Therapeutics showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with ProMIS Neurosciences and Gain Therapeutics

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

The idea behind ProMIS Neurosciences and Gain Therapeutics 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.