Correlation Between Pulmatrix and Processa Pharmaceuticals

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

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

Diversification Opportunities for Pulmatrix and Processa Pharmaceuticals

-0.58

Correlation Coefficient

Pulmatrix  Processa Pharmaceuticals

Excellent diversification

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

Pair Corralation between Pulmatrix and Processa Pharmaceuticals

Given the investment horizon of 90 days Pulmatrix is expected to generate 1.44 times more return on investment than Processa Pharmaceuticals. However, Pulmatrix is 1.44 times more volatile than Processa Pharmaceuticals. It trades about 0.04 of its potential returns per unit of risk. Processa Pharmaceuticals is currently generating about -0.28 per unit of risk. If you would invest  686.00  in Pulmatrix on December 30, 2024 and sell it today you would earn a total of  33.00  from holding Pulmatrix or generate 4.81% return on investment over 90 days.

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

Pulmatrix  vs.  Processa Pharmaceuticals

Pulmatrix

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Pulmatrix are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of very weak essential indicators, Pulmatrix displayed solid returns over the last few months and may actually be approaching a breakup point.

Processa Pharmaceuticals

Risk-Adjusted Performance

Very Weak

Over the last 90 days Processa Pharmaceuticals has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Pulmatrix and Processa Pharmaceuticals

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

The idea behind Pulmatrix and Processa Pharmaceuticals 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.