Correlation Between Procaps Group and OptiNose

Can any of the company-specific risk be diversified away by investing in both Procaps Group and OptiNose 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 OptiNose 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 OptiNose, you can compare the effects of market volatilities on Procaps Group and OptiNose 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 OptiNose. Check out your portfolio center. Please also check ongoing floating volatility patterns of Procaps Group and OptiNose.

Diversification Opportunities for Procaps Group and OptiNose

0.21

Correlation Coefficient

Procaps Group  OptiNose

Modest diversification

The 3 months correlation between Procaps and OptiNose is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding Procaps Group SA and OptiNose in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on OptiNose 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 OptiNose. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of OptiNose has no effect on the direction of Procaps Group i.e., Procaps Group and OptiNose go up and down completely randomly.

Pair Corralation between Procaps Group and OptiNose

Given the investment horizon of 90 days Procaps Group is expected to generate 5.62 times less return on investment than OptiNose. In addition to that, Procaps Group is 1.88 times more volatile than OptiNose. It trades about 0.01 of its total potential returns per unit of risk. OptiNose is currently generating about 0.11 per unit of volatility. If you would invest  620.00  in OptiNose on December 30, 2024 and sell it today you would earn a total of  295.00  from holding OptiNose or generate 47.58% return on investment over 90 days.

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

Procaps Group SA  vs.  OptiNose

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.

OptiNose

Risk-Adjusted Performance

OK

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

Pair Trading with Procaps Group and OptiNose

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

The idea behind Procaps Group SA and OptiNose 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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.