Correlation Between Pulmatrix and Histogen

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

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

Diversification Opportunities for Pulmatrix and Histogen

-0.78

Correlation Coefficient

Pulmatrix  Histogen

Pay attention - limited upside

The 3 months correlation between Pulmatrix and Histogen is -0.78. Overlapping area represents the amount of risk that can be diversified away by holding Pulmatrix and Histogen in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Histogen and Pulmatrix 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 Pulmatrix are associated (or correlated) with Histogen. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Histogen has no effect on the direction of Pulmatrix i.e., Pulmatrix and Histogen go up and down completely randomly.

Pair Corralation between Pulmatrix and Histogen

Given the investment horizon of 90 days Pulmatrix is expected to generate 0.9 times more return on investment than Histogen. However, Pulmatrix is 1.12 times less risky than Histogen. It trades about 0.2 of its potential returns per unit of risk. Histogen is currently generating about -0.11 per unit of risk. If you would invest  208.00  in Pulmatrix on September 2, 2024 and sell it today you would earn a total of  456.00  from holding Pulmatrix or generate 219.23% return on investment over 90 days.

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

Pulmatrix  vs.  Histogen

Pulmatrix

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Pulmatrix are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of very weak essential indicators, Pulmatrix displayed solid returns over the last few months and may actually be approaching a breakup point.

Histogen

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Histogen has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in January 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with Pulmatrix and Histogen

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

The idea behind Pulmatrix and Histogen 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.