Correlation Between Procaps Group and Kala Pharmaceuticals

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

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

Diversification Opportunities for Procaps Group and Kala Pharmaceuticals

-0.19

Correlation Coefficient

Procaps Group  Kala Pharmaceuticals

Good diversification

The 3 months correlation between Procaps and Kala is -0.19. Overlapping area represents the amount of risk that can be diversified away by holding Procaps Group SA and Kala Pharmaceuticals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kala Pharmaceuticals and Procaps Group 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 Procaps Group SA are associated (or correlated) with Kala Pharmaceuticals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kala Pharmaceuticals has no effect on the direction of Procaps Group i.e., Procaps Group and Kala Pharmaceuticals go up and down completely randomly.

Pair Corralation between Procaps Group and Kala Pharmaceuticals

Given the investment horizon of 90 days Procaps Group SA is expected to generate 2.42 times more return on investment than Kala Pharmaceuticals. However, Procaps Group is 2.42 times more volatile than Kala Pharmaceuticals. It trades about 0.01 of its potential returns per unit of risk. Kala Pharmaceuticals is currently generating about 0.01 per unit of risk. If you would invest  228.00  in Procaps Group SA on December 28, 2024 and sell it today you would lose (81.00) from holding Procaps Group SA or give up 35.53% of portfolio value over 90 days.

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

Procaps Group SA  vs.  Kala Pharmaceuticals

Procaps Group SA

Risk-Adjusted Performance

Very Weak

Over the last 90 days Procaps Group SA has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather weak basic indicators, Procaps Group may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Kala Pharmaceuticals

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Kala Pharmaceuticals are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong essential indicators, Kala Pharmaceuticals is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Procaps Group and Kala Pharmaceuticals

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

The idea behind Procaps Group SA and Kala Pharmaceuticals 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.