Correlation Between Pasithea Therapeutics and Champions Oncology

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

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

Diversification Opportunities for Pasithea Therapeutics and Champions Oncology

0.31

Correlation Coefficient

Pasithea Therapeutics  Champions Oncology

Weak diversification

The 3 months correlation between Pasithea and Champions is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding Pasithea Therapeutics Corp and Champions Oncology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Champions Oncology and Pasithea Therapeutics 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 Pasithea Therapeutics Corp are associated (or correlated) with Champions Oncology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Champions Oncology has no effect on the direction of Pasithea Therapeutics i.e., Pasithea Therapeutics and Champions Oncology go up and down completely randomly.

Pair Corralation between Pasithea Therapeutics and Champions Oncology

Given the investment horizon of 90 days Pasithea Therapeutics Corp is expected to under-perform the Champions Oncology. In addition to that, Pasithea Therapeutics is 1.63 times more volatile than Champions Oncology. It trades about -0.09 of its total potential returns per unit of risk. Champions Oncology is currently generating about -0.12 per unit of volatility. If you would invest  558.00  in Champions Oncology on March 1, 2024 and sell it today you would lose (97.00) from holding Champions Oncology or give up 17.38% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	96.77%
Values	Daily Returns

Pasithea Therapeutics Corp  vs.  Champions Oncology

Pasithea Therapeutics

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Pasithea Therapeutics Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unfluctuating performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in June 2024. The current disturbance may also be a sign of long term up-swing for the company investors.

Champions Oncology

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Champions Oncology has generated negative risk-adjusted returns adding no value to investors with long positions. Even with weak performance in the last few months, the Stock's fundamental drivers remain relatively invariable which may send shares a bit higher in June 2024. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Pair Trading with Pasithea Therapeutics and Champions Oncology

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

The idea behind Pasithea Therapeutics Corp and Champions Oncology 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.