Correlation Between PureTech Health and Las Vegas

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

By analyzing existing cross correlation between PureTech Health plc and Las Vegas Sands, you can compare the effects of market volatilities on PureTech Health and Las Vegas 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 PureTech Health with a short position of Las Vegas. Check out your portfolio center. Please also check ongoing floating volatility patterns of PureTech Health and Las Vegas.

Diversification Opportunities for PureTech Health and Las Vegas

0.29

Correlation Coefficient

PureTech Health  Las Vegas

Modest diversification

The 3 months correlation between PureTech and Las is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding PureTech Health plc and Las Vegas Sands in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Las Vegas Sands and PureTech Health 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 PureTech Health plc are associated (or correlated) with Las Vegas. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Las Vegas Sands has no effect on the direction of PureTech Health i.e., PureTech Health and Las Vegas go up and down completely randomly.

Pair Corralation between PureTech Health and Las Vegas

Assuming the 90 days trading horizon PureTech Health is expected to generate 4.98 times less return on investment than Las Vegas. In addition to that, PureTech Health is 1.09 times more volatile than Las Vegas Sands. It trades about 0.05 of its total potential returns per unit of risk. Las Vegas Sands is currently generating about 0.25 per unit of volatility. If you would invest  3,874  in Las Vegas Sands on September 3, 2024 and sell it today you would earn a total of  1,421  from holding Las Vegas Sands or generate 36.68% return on investment over 90 days.

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

PureTech Health plc  vs.  Las Vegas Sands

PureTech Health plc

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in PureTech Health plc are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, PureTech Health may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Las Vegas Sands

Risk-Adjusted Performance

19 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Las Vegas Sands are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady basic indicators, Las Vegas unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with PureTech Health and Las Vegas

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

The idea behind PureTech Health plc and Las Vegas Sands 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.