Correlation Between PepGen and Plandai Biotech

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

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

Diversification Opportunities for PepGen and Plandai Biotech

0.3

Correlation Coefficient

PepGen  Plandai Biotech

Weak diversification

The 3 months correlation between PepGen and Plandai is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding PepGen and Plandai Biotech in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Plandai Biotech and PepGen 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 PepGen are associated (or correlated) with Plandai Biotech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Plandai Biotech has no effect on the direction of PepGen i.e., PepGen and Plandai Biotech go up and down completely randomly.

Pair Corralation between PepGen and Plandai Biotech

Given the investment horizon of 90 days PepGen is expected to under-perform the Plandai Biotech. But the stock apears to be less risky and, when comparing its historical volatility, PepGen is 8.95 times less risky than Plandai Biotech. The stock trades about -0.07 of its potential returns per unit of risk. The Plandai Biotech is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest  0.02  in Plandai Biotech on September 5, 2024 and sell it today you would lose (0.01) from holding Plandai Biotech or give up 50.0% of portfolio value over 90 days.

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

PepGen  vs.  Plandai Biotech

PepGen

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days PepGen has generated negative risk-adjusted returns adding no value to investors with long positions. Despite conflicting performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Plandai Biotech

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Plandai Biotech are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite quite unfluctuating basic indicators, Plandai Biotech disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with PepGen and Plandai Biotech

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

The idea behind PepGen and Plandai 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.