Correlation Between XSpray Pharma and SenzaGen

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

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

Diversification Opportunities for XSpray Pharma and SenzaGen

0.43

Correlation Coefficient

XSpray Pharma  SenzaGen

Very weak diversification

The 3 months correlation between XSpray and SenzaGen is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding XSpray Pharma AB and SenzaGen AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SenzaGen AB and XSpray Pharma 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 XSpray Pharma AB are associated (or correlated) with SenzaGen. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SenzaGen AB has no effect on the direction of XSpray Pharma i.e., XSpray Pharma and SenzaGen go up and down completely randomly.

Pair Corralation between XSpray Pharma and SenzaGen

Assuming the 90 days trading horizon XSpray Pharma AB is expected to generate 1.3 times more return on investment than SenzaGen. However, XSpray Pharma is 1.3 times more volatile than SenzaGen AB. It trades about 0.06 of its potential returns per unit of risk. SenzaGen AB is currently generating about -0.03 per unit of risk. If you would invest  4,240  in XSpray Pharma AB on September 17, 2024 and sell it today you would earn a total of  135.00  from holding XSpray Pharma AB or generate 3.18% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

XSpray Pharma AB  vs.  SenzaGen AB

XSpray Pharma AB

Risk-Adjusted Performance

0 of 100

Very Weak

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

SenzaGen AB

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days SenzaGen AB has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, SenzaGen is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with XSpray Pharma and SenzaGen

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

The idea behind XSpray Pharma AB and SenzaGen AB 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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.