Correlation Between Petros Pharmaceuticals and CLS Holdings

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

By analyzing existing cross correlation between Petros Pharmaceuticals and CLS Holdings USA, you can compare the effects of market volatilities on Petros Pharmaceuticals and CLS Holdings 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 CLS Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Petros Pharmaceuticals and CLS Holdings.

Diversification Opportunities for Petros Pharmaceuticals and CLS Holdings

0.14

Correlation Coefficient

Petros Pharmaceuticals  CLS Holdings

Average diversification

The 3 months correlation between Petros and CLS is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding Petros Pharmaceuticals and CLS Holdings USA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CLS Holdings USA 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 CLS Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CLS Holdings USA has no effect on the direction of Petros Pharmaceuticals i.e., Petros Pharmaceuticals and CLS Holdings go up and down completely randomly.

Pair Corralation between Petros Pharmaceuticals and CLS Holdings

Given the investment horizon of 90 days Petros Pharmaceuticals is expected to under-perform the CLS Holdings. But the stock apears to be less risky and, when comparing its historical volatility, Petros Pharmaceuticals is 1.34 times less risky than CLS Holdings. The stock trades about -0.18 of its potential returns per unit of risk. The CLS Holdings USA is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  3.25  in CLS Holdings USA on December 18, 2024 and sell it today you would earn a total of  0.05  from holding CLS Holdings USA or generate 1.54% return on investment over 90 days.

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

Petros Pharmaceuticals  vs.  CLS Holdings USA

Petros Pharmaceuticals

Risk-Adjusted Performance

Very Weak

Over the last 90 days Petros Pharmaceuticals has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unfluctuating performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in April 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

CLS Holdings USA

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in CLS Holdings USA are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite fairly fragile basic indicators, CLS Holdings demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Petros Pharmaceuticals and CLS Holdings

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

The idea behind Petros Pharmaceuticals and CLS Holdings USA 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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.