Correlation Between Pasithea Therapeutics and NLS Pharmaceutics

Can any of the company-specific risk be diversified away by investing in both Pasithea Therapeutics and NLS Pharmaceutics 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 NLS Pharmaceutics 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 NLS Pharmaceutics AG, you can compare the effects of market volatilities on Pasithea Therapeutics and NLS Pharmaceutics 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 NLS Pharmaceutics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pasithea Therapeutics and NLS Pharmaceutics.

Diversification Opportunities for Pasithea Therapeutics and NLS Pharmaceutics

0.68

Correlation Coefficient

Pasithea Therapeutics  NLS Pharmaceutics

Poor diversification

The 3 months correlation between Pasithea and NLS is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Pasithea Therapeutics Corp and NLS Pharmaceutics AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NLS Pharmaceutics 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 NLS Pharmaceutics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NLS Pharmaceutics has no effect on the direction of Pasithea Therapeutics i.e., Pasithea Therapeutics and NLS Pharmaceutics go up and down completely randomly.

Pair Corralation between Pasithea Therapeutics and NLS Pharmaceutics

Given the investment horizon of 90 days Pasithea Therapeutics Corp is expected to generate 1.63 times more return on investment than NLS Pharmaceutics. However, Pasithea Therapeutics is 1.63 times more volatile than NLS Pharmaceutics AG. It trades about -0.03 of its potential returns per unit of risk. NLS Pharmaceutics AG is currently generating about -0.12 per unit of risk. If you would invest  485.00  in Pasithea Therapeutics Corp on September 3, 2024 and sell it today you would lose (176.00) from holding Pasithea Therapeutics Corp or give up 36.29% of portfolio value over 90 days.

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

Pasithea Therapeutics Corp  vs.  NLS Pharmaceutics AG

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 unsteady performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

NLS Pharmaceutics

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days NLS Pharmaceutics AG has generated negative risk-adjusted returns adding no value to investors with long positions. Even with unfluctuating performance in the last few months, the Stock's basic indicators remain relatively invariable which may send shares a bit higher in January 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Pair Trading with Pasithea Therapeutics and NLS Pharmaceutics

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

The idea behind Pasithea Therapeutics Corp and NLS Pharmaceutics AG 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.