Correlation Between Satsuma Pharmaceuticals and Monopar Therapeutics

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

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

Diversification Opportunities for Satsuma Pharmaceuticals and Monopar Therapeutics

0.0

Correlation Coefficient

Satsuma Pharmaceuticals  Monopar Therapeutics

Pay attention - limited upside

The 3 months correlation between Satsuma and Monopar is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Satsuma Pharmaceuticals and Monopar Therapeutics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Monopar Therapeutics and Satsuma 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 Satsuma Pharmaceuticals are associated (or correlated) with Monopar Therapeutics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Monopar Therapeutics has no effect on the direction of Satsuma Pharmaceuticals i.e., Satsuma Pharmaceuticals and Monopar Therapeutics go up and down completely randomly.

Pair Corralation between Satsuma Pharmaceuticals and Monopar Therapeutics

If you would invest  2,385  in Monopar Therapeutics on December 29, 2024 and sell it today you would earn a total of  1,754  from holding Monopar Therapeutics or generate 73.54% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Satsuma Pharmaceuticals  vs.  Monopar Therapeutics

Satsuma Pharmaceuticals

Risk-Adjusted Performance

Very Weak

Over the last 90 days Satsuma Pharmaceuticals has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Satsuma Pharmaceuticals is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Monopar Therapeutics

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Monopar Therapeutics are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Monopar Therapeutics reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Satsuma Pharmaceuticals and Monopar Therapeutics

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

The idea behind Satsuma Pharmaceuticals and Monopar Therapeutics 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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.