Correlation Between Erasca and Pasithea Therapeutics
Can any of the company-specific risk be diversified away by investing in both Erasca 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 Erasca and Pasithea Therapeutics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Erasca Inc and Pasithea Therapeutics Corp, you can compare the effects of market volatilities on Erasca 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 Erasca with a short position of Pasithea Therapeutics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Erasca and Pasithea Therapeutics.
Diversification Opportunities for Erasca and Pasithea Therapeutics
0.89 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Erasca and Pasithea is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Erasca Inc and Pasithea Therapeutics Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pasithea Therapeutics and Erasca 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 Erasca Inc 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 Erasca i.e., Erasca and Pasithea Therapeutics go up and down completely randomly.
Pair Corralation between Erasca and Pasithea Therapeutics
Given the investment horizon of 90 days Erasca Inc is expected to generate 0.65 times more return on investment than Pasithea Therapeutics. However, Erasca Inc is 1.55 times less risky than Pasithea Therapeutics. It trades about -0.01 of its potential returns per unit of risk. Pasithea Therapeutics Corp is currently generating about -0.03 per unit of risk. If you would invest 278.00 in Erasca Inc on December 12, 2024 and sell it today you would lose (126.50) from holding Erasca Inc or give up 45.5% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 99.8% |
| Values | Daily Returns |
Erasca Inc vs. Pasithea Therapeutics Corp
Performance |
| Timeline |
| Erasca Inc |
| Pasithea Therapeutics |
Erasca and Pasithea Therapeutics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Erasca and Pasithea Therapeutics
The main advantage of trading using opposite Erasca and Pasithea Therapeutics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Erasca 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.| Erasca vs. Century Therapeutics | ||
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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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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