Correlation Between Surrozen and Erytech Pharma

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

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

Diversification Opportunities for Surrozen and Erytech Pharma

-0.19

Correlation Coefficient

Surrozen  Erytech Pharma

Good diversification

The 3 months correlation between Surrozen and Erytech is -0.19. Overlapping area represents the amount of risk that can be diversified away by holding Surrozen and Erytech Pharma SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Erytech Pharma SA and Surrozen 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 Surrozen are associated (or correlated) with Erytech Pharma. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Erytech Pharma SA has no effect on the direction of Surrozen i.e., Surrozen and Erytech Pharma go up and down completely randomly.

Pair Corralation between Surrozen and Erytech Pharma

Given the investment horizon of 90 days Surrozen is expected to generate 2.64 times less return on investment than Erytech Pharma. But when comparing it to its historical volatility, Surrozen is 1.45 times less risky than Erytech Pharma. It trades about 0.04 of its potential returns per unit of risk. Erytech Pharma SA is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  57.00  in Erytech Pharma SA on October 12, 2024 and sell it today you would earn a total of  21.00  from holding Erytech Pharma SA or generate 36.84% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	22.22%
Values	Daily Returns

Surrozen  vs.  Erytech Pharma SA

Surrozen

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Surrozen are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of very uncertain basic indicators, Surrozen displayed solid returns over the last few months and may actually be approaching a breakup point.

Erytech Pharma SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Erytech Pharma SA has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, Erytech Pharma is not utilizing all of its potentials. The newest stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Surrozen and Erytech Pharma

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

The idea behind Surrozen and Erytech Pharma 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.