Correlation Between Processa Pharmaceuticals and Entera Bio

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

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

Diversification Opportunities for Processa Pharmaceuticals and Entera Bio

0.35

Correlation Coefficient

Processa Pharmaceuticals  Entera Bio

Weak diversification

The 3 months correlation between Processa and Entera is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding Processa Pharmaceuticals and Entera Bio in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Entera Bio and Processa 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 Processa Pharmaceuticals are associated (or correlated) with Entera Bio. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Entera Bio has no effect on the direction of Processa Pharmaceuticals i.e., Processa Pharmaceuticals and Entera Bio go up and down completely randomly.

Pair Corralation between Processa Pharmaceuticals and Entera Bio

Given the investment horizon of 90 days Processa Pharmaceuticals is expected to generate 2.25 times more return on investment than Entera Bio. However, Processa Pharmaceuticals is 2.25 times more volatile than Entera Bio. It trades about 0.04 of its potential returns per unit of risk. Entera Bio is currently generating about 0.0 per unit of risk. If you would invest  23.00  in Processa Pharmaceuticals on May 16, 2025 and sell it today you would earn a total of  0.00  from holding Processa Pharmaceuticals or generate 0.0% return on investment over 90 days.

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

Processa Pharmaceuticals  vs.  Entera Bio

Processa Pharmaceuticals

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Processa Pharmaceuticals are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat unfluctuating basic indicators, Processa Pharmaceuticals sustained solid returns over the last few months and may actually be approaching a breakup point.

Entera Bio

Risk-Adjusted Performance

Weakest

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

Pair Trading with Processa Pharmaceuticals and Entera Bio

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

The idea behind Processa Pharmaceuticals and Entera Bio 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.