Correlation Between Procaps Group and Veritas Pharma

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

Diversification Opportunities for Procaps Group and Veritas Pharma

0.0

Correlation Coefficient

Procaps Group  Veritas Pharma

Pay attention - limited upside

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

Pair Corralation between Procaps Group and Veritas Pharma

If you would invest  163.00  in Procaps Group SA on November 30, 2024 and sell it today you would lose (57.00) from holding Procaps Group SA or give up 34.97% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	98.33%
Values	Daily Returns

Procaps Group SA  vs.  Veritas Pharma

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 sound basic indicators, Procaps Group is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Veritas Pharma

Risk-Adjusted Performance

Very Weak

Over the last 90 days Veritas Pharma has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable technical indicators, Veritas Pharma is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Procaps Group and Veritas Pharma

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

The idea behind Procaps Group SA and Veritas Pharma 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.