Correlation Between Santhera Pharmaceuticals and Leclanche

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

Diversification Opportunities for Santhera Pharmaceuticals and Leclanche

0.15

Correlation Coefficient

Santhera Pharmaceuticals  Leclanche

Average diversification

The 3 months correlation between Santhera and Leclanche is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding Santhera Pharmaceuticals Holdi and Leclanche SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Leclanche SA 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 Leclanche. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Leclanche SA has no effect on the direction of Santhera Pharmaceuticals i.e., Santhera Pharmaceuticals and Leclanche go up and down completely randomly.

Pair Corralation between Santhera Pharmaceuticals and Leclanche

Assuming the 90 days trading horizon Santhera Pharmaceuticals Holding is expected to generate 1.19 times more return on investment than Leclanche. However, Santhera Pharmaceuticals is 1.19 times more volatile than Leclanche SA. It trades about 0.41 of its potential returns per unit of risk. Leclanche SA is currently generating about 0.14 per unit of risk. If you would invest  998.00  in Santhera Pharmaceuticals Holding on October 20, 2024 and sell it today you would earn a total of  402.00  from holding Santhera Pharmaceuticals Holding or generate 40.28% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	94.12%
Values	Daily Returns

Santhera Pharmaceuticals Holdi  vs.  Leclanche SA

Santhera Pharmaceuticals

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Santhera Pharmaceuticals Holding are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Santhera Pharmaceuticals showed solid returns over the last few months and may actually be approaching a breakup point.

Leclanche SA

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Leclanche SA are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Leclanche showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Santhera Pharmaceuticals and Leclanche

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

The idea behind Santhera Pharmaceuticals Holding and Leclanche 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.