Correlation Between Fortress Biotech and GH Research

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

By analyzing existing cross correlation between Fortress Biotech and GH Research PLC, you can compare the effects of market volatilities on Fortress Biotech and GH Research 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 Fortress Biotech with a short position of GH Research. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fortress Biotech and GH Research.

Diversification Opportunities for Fortress Biotech and GH Research

0.28

Correlation Coefficient

Fortress Biotech  GH Research

Modest diversification

The 3 months correlation between Fortress and GHRS is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding Fortress Biotech and GH Research PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GH Research PLC and Fortress Biotech 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 Fortress Biotech are associated (or correlated) with GH Research. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GH Research PLC has no effect on the direction of Fortress Biotech i.e., Fortress Biotech and GH Research go up and down completely randomly.

Pair Corralation between Fortress Biotech and GH Research

Given the investment horizon of 90 days Fortress Biotech is expected to generate 1.59 times less return on investment than GH Research. In addition to that, Fortress Biotech is 1.13 times more volatile than GH Research PLC. It trades about 0.01 of its total potential returns per unit of risk. GH Research PLC is currently generating about 0.03 per unit of volatility. If you would invest  810.00  in GH Research PLC on September 17, 2024 and sell it today you would earn a total of  10.00  from holding GH Research PLC or generate 1.23% return on investment over 90 days.

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

Fortress Biotech  vs.  GH Research PLC

Fortress Biotech

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Fortress Biotech are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy forward indicators, Fortress Biotech is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

GH Research PLC

Risk-Adjusted Performance

2 of 100

Very Weak

Compared to the overall equity markets, risk-adjusted returns on investments in GH Research PLC are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unfluctuating basic indicators, GH Research may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Fortress Biotech and GH Research

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

The idea behind Fortress Biotech and GH Research PLC 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.

Check out your portfolio center.

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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.