Correlation Between Quoin Pharmaceuticals and GT Biopharma

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

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

Diversification Opportunities for Quoin Pharmaceuticals and GT Biopharma

0.39

Correlation Coefficient

Quoin Pharmaceuticals  GT Biopharma

Weak diversification

The 3 months correlation between Quoin and GTBP is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding Quoin Pharmaceuticals Ltd and GT Biopharma in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GT Biopharma and Quoin 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 Quoin Pharmaceuticals Ltd are associated (or correlated) with GT Biopharma. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GT Biopharma has no effect on the direction of Quoin Pharmaceuticals i.e., Quoin Pharmaceuticals and GT Biopharma go up and down completely randomly.

Pair Corralation between Quoin Pharmaceuticals and GT Biopharma

Given the investment horizon of 90 days Quoin Pharmaceuticals Ltd is expected to under-perform the GT Biopharma. But the stock apears to be less risky and, when comparing its historical volatility, Quoin Pharmaceuticals Ltd is 1.38 times less risky than GT Biopharma. The stock trades about -0.05 of its potential returns per unit of risk. The GT Biopharma is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest  894.00  in GT Biopharma on August 31, 2024 and sell it today you would lose (608.00) from holding GT Biopharma or give up 68.01% of portfolio value over 90 days.

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

Quoin Pharmaceuticals Ltd  vs.  GT Biopharma

Quoin Pharmaceuticals

Risk-Adjusted Performance

2 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Quoin Pharmaceuticals Ltd are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Quoin Pharmaceuticals showed solid returns over the last few months and may actually be approaching a breakup point.

GT Biopharma

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in GT Biopharma are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak fundamental drivers, GT Biopharma reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Quoin Pharmaceuticals and GT Biopharma

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

The idea behind Quoin Pharmaceuticals Ltd and GT 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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.