Correlation Between Petros Pharmaceuticals and Alterity Therapeutics

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

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

Diversification Opportunities for Petros Pharmaceuticals and Alterity Therapeutics

-0.43

Correlation Coefficient

Petros Pharmaceuticals  Alterity Therapeutics

Very good diversification

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

Pair Corralation between Petros Pharmaceuticals and Alterity Therapeutics

Given the investment horizon of 90 days Petros Pharmaceuticals is expected to under-perform the Alterity Therapeutics. In addition to that, Petros Pharmaceuticals is 2.42 times more volatile than Alterity Therapeutics. It trades about -0.15 of its total potential returns per unit of risk. Alterity Therapeutics is currently generating about -0.13 per unit of volatility. If you would invest  207.00  in Alterity Therapeutics on March 13, 2024 and sell it today you would lose (16.00) from holding Alterity Therapeutics or give up 7.73% of portfolio value over 90 days.

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

Petros Pharmaceuticals  vs.  Alterity Therapeutics

Petros Pharmaceuticals

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Petros Pharmaceuticals has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in July 2024. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Alterity Therapeutics

Risk-Adjusted Performance

2 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Alterity Therapeutics are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak technical indicators, Alterity Therapeutics exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Petros Pharmaceuticals and Alterity Therapeutics

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

The idea behind Petros Pharmaceuticals and Alterity 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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.