Correlation Between Santhera Pharmaceuticals and COSMO Pharmaceuticals

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

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

Diversification Opportunities for Santhera Pharmaceuticals and COSMO Pharmaceuticals

0.69

Correlation Coefficient

Santhera Pharmaceuticals  COSMO Pharmaceuticals

Poor diversification

The 3 months correlation between Santhera and COSMO is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Santhera Pharmaceuticals Holdi and COSMO Pharmaceuticals SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on COSMO Pharmaceuticals and Santhera 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 Santhera Pharmaceuticals Holding are associated (or correlated) with COSMO Pharmaceuticals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of COSMO Pharmaceuticals has no effect on the direction of Santhera Pharmaceuticals i.e., Santhera Pharmaceuticals and COSMO Pharmaceuticals go up and down completely randomly.

Pair Corralation between Santhera Pharmaceuticals and COSMO Pharmaceuticals

Assuming the 90 days trading horizon Santhera Pharmaceuticals Holding is expected to generate 2.56 times more return on investment than COSMO Pharmaceuticals. However, Santhera Pharmaceuticals is 2.56 times more volatile than COSMO Pharmaceuticals SA. It trades about 0.03 of its potential returns per unit of risk. COSMO Pharmaceuticals SA is currently generating about -0.38 per unit of risk. If you would invest  932.00  in Santhera Pharmaceuticals Holding on September 14, 2024 and sell it today you would earn a total of  26.00  from holding Santhera Pharmaceuticals Holding or generate 2.79% return on investment over 90 days.

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

Santhera Pharmaceuticals Holdi  vs.  COSMO Pharmaceuticals SA

Santhera Pharmaceuticals

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Santhera Pharmaceuticals Holding are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, Santhera Pharmaceuticals is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

COSMO Pharmaceuticals

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days COSMO Pharmaceuticals SA has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of abnormal performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in January 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Pair Trading with Santhera Pharmaceuticals and COSMO Pharmaceuticals

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

The idea behind Santhera Pharmaceuticals Holding and COSMO Pharmaceuticals SA 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.