Correlation Between Petros Pharmaceuticals and OrganiGram Holdings

Can any of the company-specific risk be diversified away by investing in both Petros Pharmaceuticals and OrganiGram 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 OrganiGram 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 OrganiGram Holdings, you can compare the effects of market volatilities on Petros Pharmaceuticals and OrganiGram 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 OrganiGram Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Petros Pharmaceuticals and OrganiGram Holdings.

Diversification Opportunities for Petros Pharmaceuticals and OrganiGram Holdings

0.58

Correlation Coefficient

Petros Pharmaceuticals  OrganiGram Holdings

Very weak diversification

The 3 months correlation between Petros and OrganiGram is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding Petros Pharmaceuticals and OrganiGram Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on OrganiGram Holdings 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 OrganiGram Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of OrganiGram Holdings has no effect on the direction of Petros Pharmaceuticals i.e., Petros Pharmaceuticals and OrganiGram Holdings go up and down completely randomly.

Pair Corralation between Petros Pharmaceuticals and OrganiGram Holdings

Given the investment horizon of 90 days Petros Pharmaceuticals is expected to generate 5.5 times more return on investment than OrganiGram Holdings. However, Petros Pharmaceuticals is 5.5 times more volatile than OrganiGram Holdings. It trades about 0.15 of its potential returns per unit of risk. OrganiGram Holdings is currently generating about 0.09 per unit of risk. If you would invest  27.00  in Petros Pharmaceuticals on October 1, 2024 and sell it today you would earn a total of  9.40  from holding Petros Pharmaceuticals or generate 34.81% return on investment over 90 days.

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

Petros Pharmaceuticals  vs.  OrganiGram Holdings

Petros Pharmaceuticals

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Petros Pharmaceuticals are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite fairly unfluctuating basic indicators, Petros Pharmaceuticals demonstrated solid returns over the last few months and may actually be approaching a breakup point.

OrganiGram Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days OrganiGram Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong technical and fundamental indicators, OrganiGram Holdings is not utilizing all of its potentials. The latest stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with Petros Pharmaceuticals and OrganiGram Holdings

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

The idea behind Petros Pharmaceuticals and OrganiGram Holdings 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.