Correlation Between Er Therapeutics and Searchlight Resources

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

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

Diversification Opportunities for Er Therapeutics and Searchlight Resources

0.0

Correlation Coefficient

Er Therapeutics  Searchlight Resources

Pay attention - limited upside

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

Pair Corralation between Er Therapeutics and Searchlight Resources

If you would invest  0.80  in Searchlight Resources on October 12, 2024 and sell it today you would lose (0.17) from holding Searchlight Resources or give up 21.25% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Er Therapeutics  vs.  Searchlight Resources

Er Therapeutics

Risk-Adjusted Performance

0 of 100

Very Weak

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

Searchlight Resources

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Searchlight Resources are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Searchlight Resources reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Er Therapeutics and Searchlight Resources

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

The idea behind Er Therapeutics and Searchlight Resources 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.