Correlation Between Palatin Technologies and Fortress Biotech

Can any of the company-specific risk be diversified away by investing in both Palatin Technologies and Fortress Biotech 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 Palatin Technologies and Fortress Biotech into the same portfolio, which is an essential part of the fundamental portfolio management process.

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

Diversification Opportunities for Palatin Technologies and Fortress Biotech

0.52

Correlation Coefficient

Palatin Technologies  Fortress Biotech

Very weak diversification

The 3 months correlation between Palatin and Fortress is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding Palatin Technologies and Fortress Biotech in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fortress Biotech and Palatin Technologies 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 Palatin Technologies are associated (or correlated) with Fortress Biotech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fortress Biotech has no effect on the direction of Palatin Technologies i.e., Palatin Technologies and Fortress Biotech go up and down completely randomly.

Pair Corralation between Palatin Technologies and Fortress Biotech

Considering the 90-day investment horizon Palatin Technologies is expected to generate 1.57 times more return on investment than Fortress Biotech. However, Palatin Technologies is 1.57 times more volatile than Fortress Biotech. It trades about 0.01 of its potential returns per unit of risk. Fortress Biotech is currently generating about -0.11 per unit of risk. If you would invest  93.00  in Palatin Technologies on December 5, 2024 and sell it today you would lose (8.00) from holding Palatin Technologies or give up 8.6% of portfolio value over 90 days.

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

Palatin Technologies  vs.  Fortress Biotech

Palatin Technologies

Risk-Adjusted Performance

Very Weak

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

Fortress Biotech

Risk-Adjusted Performance

Very Weak

Over the last 90 days Fortress Biotech has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's forward indicators remain very healthy which may send shares a bit higher in April 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with Palatin Technologies and Fortress Biotech

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

The idea behind Palatin Technologies and Fortress Biotech 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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.