Correlation Between Petros Pharmaceuticals and Sunshine Biopharma

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

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

Diversification Opportunities for Petros Pharmaceuticals and Sunshine Biopharma

0.65

Correlation Coefficient

Petros Pharmaceuticals  Sunshine Biopharma

Poor diversification

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

Pair Corralation between Petros Pharmaceuticals and Sunshine Biopharma

Given the investment horizon of 90 days Petros Pharmaceuticals is expected to generate 1.76 times more return on investment than Sunshine Biopharma. However, Petros Pharmaceuticals is 1.76 times more volatile than Sunshine Biopharma. It trades about 0.02 of its potential returns per unit of risk. Sunshine Biopharma is currently generating about -0.07 per unit of risk. If you would invest  214.00  in Petros Pharmaceuticals on September 4, 2024 and sell it today you would lose (186.00) from holding Petros Pharmaceuticals or give up 86.92% 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.  Sunshine Biopharma

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 unfluctuating 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.

Sunshine Biopharma

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Sunshine Biopharma are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy technical and fundamental indicators, Sunshine Biopharma is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Petros Pharmaceuticals and Sunshine Biopharma

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

The idea behind Petros Pharmaceuticals and Sunshine Biopharma 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.