Correlation Between Profithol and Vytrus Biotech

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

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

Diversification Opportunities for Profithol and Vytrus Biotech

-0.45

Correlation Coefficient

Profithol  Vytrus Biotech

Very good diversification

The 3 months correlation between Profithol and Vytrus is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding Profithol SA and Vytrus Biotech SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vytrus Biotech SA and Profithol 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 Profithol SA are associated (or correlated) with Vytrus Biotech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vytrus Biotech SA has no effect on the direction of Profithol i.e., Profithol and Vytrus Biotech go up and down completely randomly.

Pair Corralation between Profithol and Vytrus Biotech

Assuming the 90 days trading horizon Profithol SA is expected to generate 4.01 times more return on investment than Vytrus Biotech. However, Profithol is 4.01 times more volatile than Vytrus Biotech SA. It trades about 0.1 of its potential returns per unit of risk. Vytrus Biotech SA is currently generating about -0.12 per unit of risk. If you would invest  37.00  in Profithol SA on September 13, 2024 and sell it today you would earn a total of  21.00  from holding Profithol SA or generate 56.76% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	98.46%
Values	Daily Returns

Profithol SA  vs.  Vytrus Biotech SA

Profithol SA

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Profithol SA are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady technical indicators, Profithol exhibited solid returns over the last few months and may actually be approaching a breakup point.

Vytrus Biotech SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Vytrus Biotech SA has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's basic indicators remain rather sound which may send shares a bit higher in January 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with Profithol and Vytrus Biotech

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

The idea behind Profithol SA and Vytrus Biotech 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.