Correlation Between ProMIS Neurosciences and Hillevax

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

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

Diversification Opportunities for ProMIS Neurosciences and Hillevax

-0.39

Correlation Coefficient

ProMIS Neurosciences  Hillevax

Very good diversification

The 3 months correlation between ProMIS and Hillevax is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding ProMIS Neurosciences and Hillevax in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hillevax 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 Hillevax. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hillevax has no effect on the direction of ProMIS Neurosciences i.e., ProMIS Neurosciences and Hillevax go up and down completely randomly.

Pair Corralation between ProMIS Neurosciences and Hillevax

Considering the 90-day investment horizon ProMIS Neurosciences is expected to generate 1.46 times more return on investment than Hillevax. However, ProMIS Neurosciences is 1.46 times more volatile than Hillevax. It trades about 0.13 of its potential returns per unit of risk. Hillevax is currently generating about 0.1 per unit of risk. If you would invest  97.00  in ProMIS Neurosciences on October 7, 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 Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

ProMIS Neurosciences  vs.  Hillevax

ProMIS Neurosciences

Risk-Adjusted Performance

0 of 100

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 very healthy primary indicators, ProMIS Neurosciences is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Hillevax

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Hillevax are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Hillevax showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with ProMIS Neurosciences and Hillevax

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

The idea behind ProMIS Neurosciences and Hillevax 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.