Correlation Between Pasithea Therapeutics and PetVivo Holdings

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

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

Diversification Opportunities for Pasithea Therapeutics and PetVivo Holdings

-0.55

Correlation Coefficient

Pasithea Therapeutics  PetVivo Holdings

Excellent diversification

The 3 months correlation between Pasithea and PetVivo is -0.55. Overlapping area represents the amount of risk that can be diversified away by holding Pasithea Therapeutics Corp and PetVivo Holdings Warrant in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PetVivo Holdings Warrant and Pasithea Therapeutics 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 Pasithea Therapeutics Corp are associated (or correlated) with PetVivo Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PetVivo Holdings Warrant has no effect on the direction of Pasithea Therapeutics i.e., Pasithea Therapeutics and PetVivo Holdings go up and down completely randomly.

Pair Corralation between Pasithea Therapeutics and PetVivo Holdings

Assuming the 90 days horizon Pasithea Therapeutics Corp is expected to generate 9.25 times more return on investment than PetVivo Holdings. However, Pasithea Therapeutics is 9.25 times more volatile than PetVivo Holdings Warrant. It trades about 0.17 of its potential returns per unit of risk. PetVivo Holdings Warrant is currently generating about 0.08 per unit of risk. If you would invest  3.96  in Pasithea Therapeutics Corp on September 28, 2024 and sell it today you would lose (1.78) from holding Pasithea Therapeutics Corp or give up 44.82% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	38.74%
Values	Daily Returns

Pasithea Therapeutics Corp  vs.  PetVivo Holdings Warrant

Pasithea Therapeutics

Risk-Adjusted Performance

0 of 100

Weak

Over the last 90 days Pasithea Therapeutics Corp has generated negative risk-adjusted returns adding no value to investors with long positions. 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.

PetVivo Holdings Warrant

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days PetVivo Holdings Warrant has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, PetVivo Holdings is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Pasithea Therapeutics and PetVivo Holdings

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

The idea behind Pasithea Therapeutics Corp and PetVivo Holdings Warrant 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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.