Correlation Between Quoin Pharmaceuticals and Sonnet Biotherapeutics

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

Diversification Opportunities for Quoin Pharmaceuticals and Sonnet Biotherapeutics

0.05

Correlation Coefficient

Quoin Pharmaceuticals  Sonnet Biotherapeutics

Significant diversification

The 3 months correlation between Quoin and Sonnet is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding Quoin Pharmaceuticals Ltd and Sonnet Biotherapeutics Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sonnet Biotherapeutics 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 Sonnet Biotherapeutics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sonnet Biotherapeutics has no effect on the direction of Quoin Pharmaceuticals i.e., Quoin Pharmaceuticals and Sonnet Biotherapeutics go up and down completely randomly.

Pair Corralation between Quoin Pharmaceuticals and Sonnet Biotherapeutics

Given the investment horizon of 90 days Quoin Pharmaceuticals Ltd is expected to generate 1.6 times more return on investment than Sonnet Biotherapeutics. However, Quoin Pharmaceuticals is 1.6 times more volatile than Sonnet Biotherapeutics Holdings. It trades about 0.01 of its potential returns per unit of risk. Sonnet Biotherapeutics Holdings is currently generating about -0.22 per unit of risk. If you would invest  80.00  in Quoin Pharmaceuticals Ltd on September 4, 2024 and sell it today you would lose (16.00) from holding Quoin Pharmaceuticals Ltd or give up 20.0% of portfolio value over 90 days.

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

Quoin Pharmaceuticals Ltd  vs.  Sonnet Biotherapeutics Holding

Quoin Pharmaceuticals

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Quoin Pharmaceuticals Ltd has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly conflicting basic indicators, Quoin Pharmaceuticals may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Sonnet Biotherapeutics

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sonnet Biotherapeutics Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of conflicting performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in January 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with Quoin Pharmaceuticals and Sonnet Biotherapeutics

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

The idea behind Quoin Pharmaceuticals Ltd and Sonnet Biotherapeutics 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.