Correlation Between Santhera Pharmaceuticals and Idorsia

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

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

Diversification Opportunities for Santhera Pharmaceuticals and Idorsia

0.38

Correlation Coefficient

Santhera Pharmaceuticals  Idorsia

Weak diversification

The 3 months correlation between Santhera and Idorsia is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding Santhera Pharmaceuticals Holdi and Idorsia in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Idorsia and Santhera Pharmaceuticals 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 Santhera Pharmaceuticals Holding are associated (or correlated) with Idorsia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Idorsia has no effect on the direction of Santhera Pharmaceuticals i.e., Santhera Pharmaceuticals and Idorsia go up and down completely randomly.

Pair Corralation between Santhera Pharmaceuticals and Idorsia

Assuming the 90 days trading horizon Santhera Pharmaceuticals Holding is expected to generate 0.29 times more return on investment than Idorsia. However, Santhera Pharmaceuticals Holding is 3.49 times less risky than Idorsia. It trades about 0.18 of its potential returns per unit of risk. Idorsia is currently generating about -0.03 per unit of risk. If you would invest  910.00  in Santhera Pharmaceuticals Holding on September 27, 2024 and sell it today you would earn a total of  234.00  from holding Santhera Pharmaceuticals Holding or generate 25.71% return on investment over 90 days.

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

Santhera Pharmaceuticals Holdi  vs.  Idorsia

Santhera Pharmaceuticals

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Santhera Pharmaceuticals Holding are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Santhera Pharmaceuticals showed solid returns over the last few months and may actually be approaching a breakup point.

Idorsia

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Idorsia has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of abnormal performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in January 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Pair Trading with Santhera Pharmaceuticals and Idorsia

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

The idea behind Santhera Pharmaceuticals Holding and Idorsia 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.