Correlation Between Petros Pharmaceuticals and Assertio Therapeutics

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

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

Diversification Opportunities for Petros Pharmaceuticals and Assertio Therapeutics

0.65

Correlation Coefficient

Petros Pharmaceuticals  Assertio Therapeutics

Poor diversification

The 3 months correlation between Petros and Assertio is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Petros Pharmaceuticals and Assertio Therapeutics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Assertio Therapeutics and Petros Pharmaceuticals 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 Petros Pharmaceuticals are associated (or correlated) with Assertio Therapeutics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Assertio Therapeutics has no effect on the direction of Petros Pharmaceuticals i.e., Petros Pharmaceuticals and Assertio Therapeutics go up and down completely randomly.

Pair Corralation between Petros Pharmaceuticals and Assertio Therapeutics

Given the investment horizon of 90 days Petros Pharmaceuticals is expected to under-perform the Assertio Therapeutics. But the stock apears to be less risky and, when comparing its historical volatility, Petros Pharmaceuticals is 1.85 times less risky than Assertio Therapeutics. The stock trades about -0.31 of its potential returns per unit of risk. The Assertio Therapeutics is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest  106.00  in Assertio Therapeutics on September 3, 2024 and sell it today you would lose (6.00) from holding Assertio Therapeutics or give up 5.66% of portfolio value over 90 days.

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

Petros Pharmaceuticals  vs.  Assertio Therapeutics

Petros Pharmaceuticals

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Petros Pharmaceuticals has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain strong and the recent confusion on Wall Street may also be a sign of long-lasting gains for the firm traders.

Assertio Therapeutics

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Assertio Therapeutics has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Assertio Therapeutics is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Petros Pharmaceuticals and Assertio Therapeutics

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

The idea behind Petros Pharmaceuticals and Assertio Therapeutics 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.