Correlation Between PsyBio Therapeutics and GH Research

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

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

Diversification Opportunities for PsyBio Therapeutics and GH Research

-0.19

Correlation Coefficient

PsyBio Therapeutics  GH Research

Good diversification

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

Pair Corralation between PsyBio Therapeutics and GH Research

Assuming the 90 days horizon PsyBio Therapeutics Corp is expected to generate 24.22 times more return on investment than GH Research. However, PsyBio Therapeutics is 24.22 times more volatile than GH Research PLC. It trades about 0.1 of its potential returns per unit of risk. GH Research PLC is currently generating about 0.11 per unit of risk. If you would invest  0.01  in PsyBio Therapeutics Corp on October 11, 2024 and sell it today you would earn a total of  0.00  from holding PsyBio Therapeutics Corp or generate 0.0% return on investment over 90 days.

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

PsyBio Therapeutics Corp  vs.  GH Research PLC

PsyBio Therapeutics Corp

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in PsyBio Therapeutics Corp are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile fundamental drivers, PsyBio Therapeutics reported solid returns over the last few months and may actually be approaching a breakup point.

GH Research PLC

Risk-Adjusted Performance

8 of 100

OK

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

Pair Trading with PsyBio Therapeutics and GH Research

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

The idea behind PsyBio Therapeutics Corp and GH Research PLC 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.