Correlation Between Petros Pharmaceuticals and Insignia Systems

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

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

Diversification Opportunities for Petros Pharmaceuticals and Insignia Systems

-0.21

Correlation Coefficient

Petros Pharmaceuticals  Insignia Systems

Very good diversification

The 3 months correlation between Petros and Insignia is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding Petros Pharmaceuticals and Insignia Systems in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Insignia Systems 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 Insignia Systems. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Insignia Systems has no effect on the direction of Petros Pharmaceuticals i.e., Petros Pharmaceuticals and Insignia Systems go up and down completely randomly.

Pair Corralation between Petros Pharmaceuticals and Insignia Systems

If you would invest  774.00  in Insignia Systems on September 16, 2024 and sell it today you would earn a total of  0.00  from holding Insignia Systems or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	1.54%
Values	Daily Returns

Petros Pharmaceuticals  vs.  Insignia Systems

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 fairly strong basic indicators, Petros Pharmaceuticals is not utilizing all of its potentials. The recent stock price confusion, may contribute to short-horizon losses for the traders.

Insignia Systems

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Petros Pharmaceuticals and Insignia Systems

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

The idea behind Petros Pharmaceuticals and Insignia Systems 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.