Correlation Between Sharps Technology and Pasithea Therapeutics

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

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

Diversification Opportunities for Sharps Technology and Pasithea Therapeutics

-0.31

Correlation Coefficient

Sharps Technology  Pasithea Therapeutics

Very good diversification

The 3 months correlation between Sharps and Pasithea is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding Sharps Technology Warrant and Pasithea Therapeutics Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pasithea Therapeutics and Sharps Technology 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 Sharps Technology Warrant 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 Sharps Technology i.e., Sharps Technology and Pasithea Therapeutics go up and down completely randomly.

Pair Corralation between Sharps Technology and Pasithea Therapeutics

Assuming the 90 days horizon Sharps Technology Warrant is expected to under-perform the Pasithea Therapeutics. But the stock apears to be less risky and, when comparing its historical volatility, Sharps Technology Warrant is 1.65 times less risky than Pasithea Therapeutics. The stock trades about -0.05 of its potential returns per unit of risk. The Pasithea Therapeutics Corp is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest  1.13  in Pasithea Therapeutics Corp on August 31, 2024 and sell it today you would earn a total of  0.90  from holding Pasithea Therapeutics Corp or generate 79.65% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	64.0%
Values	Daily Returns

Sharps Technology Warrant  vs.  Pasithea Therapeutics Corp

Sharps Technology Warrant

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sharps Technology Warrant has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in December 2024. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Pasithea Therapeutics

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Pasithea Therapeutics Corp are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unsteady basic indicators, Pasithea Therapeutics showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Sharps Technology and Pasithea Therapeutics

The main advantage of trading using opposite Sharps Technology and Pasithea Therapeutics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sharps Technology 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 Sharps Technology Warrant 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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.