Correlation Between Zentalis Pharmaceuticals and Procaps Group

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

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

Diversification Opportunities for Zentalis Pharmaceuticals and Procaps Group

-0.32

Correlation Coefficient

Zentalis Pharmaceuticals  Procaps Group

Very good diversification

The 3 months correlation between Zentalis and Procaps is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding Zentalis Pharmaceuticals Llc and Procaps Group SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Procaps Group SA and Zentalis 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 Zentalis Pharmaceuticals Llc are associated (or correlated) with Procaps Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Procaps Group SA has no effect on the direction of Zentalis Pharmaceuticals i.e., Zentalis Pharmaceuticals and Procaps Group go up and down completely randomly.

Pair Corralation between Zentalis Pharmaceuticals and Procaps Group

Given the investment horizon of 90 days Zentalis Pharmaceuticals Llc is expected to under-perform the Procaps Group. But the stock apears to be less risky and, when comparing its historical volatility, Zentalis Pharmaceuticals Llc is 1.49 times less risky than Procaps Group. The stock trades about -0.05 of its potential returns per unit of risk. The Procaps Group SA is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  479.00  in Procaps Group SA on October 7, 2024 and sell it today you would lose (254.00) from holding Procaps Group SA or give up 53.03% of portfolio value over 90 days.

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

Zentalis Pharmaceuticals Llc  vs.  Procaps Group SA

Zentalis Pharmaceuticals

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Zentalis Pharmaceuticals Llc are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite quite weak basic indicators, Zentalis Pharmaceuticals disclosed solid returns over the last few months and may actually be approaching a breakup point.

Procaps Group SA

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Procaps Group SA are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak basic indicators, Procaps Group exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Zentalis Pharmaceuticals and Procaps Group

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

The idea behind Zentalis Pharmaceuticals Llc and Procaps Group 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.