Correlation Between Santhera Pharmaceuticals and Relief Therapeutics

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

Diversification Opportunities for Santhera Pharmaceuticals and Relief Therapeutics

-0.33

Correlation Coefficient

Santhera Pharmaceuticals  Relief Therapeutics

Very good diversification

The 3 months correlation between Santhera and Relief is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding Santhera Pharmaceuticals Holdi and Relief Therapeutics Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Relief Therapeutics 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 Relief Therapeutics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Relief Therapeutics has no effect on the direction of Santhera Pharmaceuticals i.e., Santhera Pharmaceuticals and Relief Therapeutics go up and down completely randomly.

Pair Corralation between Santhera Pharmaceuticals and Relief Therapeutics

Assuming the 90 days trading horizon Santhera Pharmaceuticals Holding is expected to generate 0.64 times more return on investment than Relief Therapeutics. However, Santhera Pharmaceuticals Holding is 1.57 times less risky than Relief Therapeutics. It trades about 0.24 of its potential returns per unit of risk. Relief Therapeutics Holding is currently generating about -0.11 per unit of risk. If you would invest  903.00  in Santhera Pharmaceuticals Holding on October 24, 2024 and sell it today you would earn a total of  607.00  from holding Santhera Pharmaceuticals Holding or generate 67.22% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.31%
Values	Daily Returns

Santhera Pharmaceuticals Holdi  vs.  Relief Therapeutics Holding

Santhera Pharmaceuticals

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Santhera Pharmaceuticals Holding are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Santhera Pharmaceuticals showed solid returns over the last few months and may actually be approaching a breakup point.

Relief Therapeutics

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Relief Therapeutics Holding has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fragile performance in the last few months, the Stock's technical and fundamental indicators remain fairly stable which may send shares a bit higher in February 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 Relief Therapeutics

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

The idea behind Santhera Pharmaceuticals Holding and Relief Therapeutics Holding 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.

Check out your portfolio center.

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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.