Correlation Between GH Research and Fortress Biotech

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

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

Diversification Opportunities for GH Research and Fortress Biotech

0.28

Correlation Coefficient

GH Research  Fortress Biotech

Modest diversification

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

Pair Corralation between GH Research and Fortress Biotech

Given the investment horizon of 90 days GH Research PLC is expected to generate 0.88 times more return on investment than Fortress Biotech. However, GH Research PLC is 1.13 times less risky than Fortress Biotech. It trades about 0.03 of its potential returns per unit of risk. Fortress Biotech is currently generating about 0.01 per unit of risk. 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

GH Research PLC  vs.  Fortress Biotech

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.

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.

Pair Trading with GH Research and Fortress Biotech

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

The idea behind GH Research PLC and Fortress Biotech 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.