Correlation Between Sera Prognostics and Palatin Technologies

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

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

Diversification Opportunities for Sera Prognostics and Palatin Technologies

-0.02

Correlation Coefficient

Sera Prognostics  Palatin Technologies

Good diversification

The 3 months correlation between Sera and Palatin is -0.02. Overlapping area represents the amount of risk that can be diversified away by holding Sera Prognostics and Palatin Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Palatin Technologies and Sera Prognostics 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 Sera Prognostics are associated (or correlated) with Palatin Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Palatin Technologies has no effect on the direction of Sera Prognostics i.e., Sera Prognostics and Palatin Technologies go up and down completely randomly.

Pair Corralation between Sera Prognostics and Palatin Technologies

Given the investment horizon of 90 days Sera Prognostics is expected to generate 0.94 times more return on investment than Palatin Technologies. However, Sera Prognostics is 1.06 times less risky than Palatin Technologies. It trades about 0.01 of its potential returns per unit of risk. Palatin Technologies is currently generating about 0.0 per unit of risk. If you would invest  705.00  in Sera Prognostics on August 13, 2024 and sell it today you would lose (31.00) from holding Sera Prognostics or give up 4.4% of portfolio value over 90 days.

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

Sera Prognostics  vs.  Palatin Technologies

Sera Prognostics

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sera Prognostics has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Sera Prognostics is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Palatin Technologies

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Palatin Technologies has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Palatin Technologies is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Sera Prognostics and Palatin Technologies

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

The idea behind Sera Prognostics and Palatin Technologies 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.

Check out your portfolio center.

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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.