Correlation Between Metacrine and Pasithea Therapeutics

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

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

Diversification Opportunities for Metacrine and Pasithea Therapeutics

-0.66

Correlation Coefficient

Metacrine  Pasithea Therapeutics

Excellent diversification

The 3 months correlation between Metacrine and Pasithea is -0.66. Overlapping area represents the amount of risk that can be diversified away by holding Metacrine and Pasithea Therapeutics Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pasithea Therapeutics and Metacrine 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 Metacrine are associated (or correlated) with Pasithea Therapeutics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pasithea Therapeutics has no effect on the direction of Metacrine i.e., Metacrine and Pasithea Therapeutics go up and down completely randomly.

Pair Corralation between Metacrine and Pasithea Therapeutics

If you would invest  49.00  in Metacrine on August 31, 2024 and sell it today you would earn a total of  0.00  from holding Metacrine or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	1.59%
Values	Daily Returns

Metacrine  vs.  Pasithea Therapeutics Corp

Metacrine

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Metacrine has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable fundamental indicators, Metacrine is not utilizing all of its potentials. The current stock price agitation, may contribute to short-term losses for the retail investors.

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 abnormal performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in December 2024. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Metacrine and Pasithea Therapeutics

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

The idea behind Metacrine and Pasithea Therapeutics Corp 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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.