Correlation Between Pasithea Therapeutics and GlaxoSmithKline PLC
Can any of the company-specific risk be diversified away by investing in both Pasithea Therapeutics and GlaxoSmithKline PLC 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 GlaxoSmithKline PLC 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 GlaxoSmithKline PLC ADR, you can compare the effects of market volatilities on Pasithea Therapeutics and GlaxoSmithKline PLC 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 GlaxoSmithKline PLC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pasithea Therapeutics and GlaxoSmithKline PLC.
Diversification Opportunities for Pasithea Therapeutics and GlaxoSmithKline PLC
-0.35 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Pasithea and GlaxoSmithKline is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding Pasithea Therapeutics Corp and GlaxoSmithKline PLC ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GlaxoSmithKline PLC ADR 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 GlaxoSmithKline PLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GlaxoSmithKline PLC ADR has no effect on the direction of Pasithea Therapeutics i.e., Pasithea Therapeutics and GlaxoSmithKline PLC go up and down completely randomly.
Pair Corralation between Pasithea Therapeutics and GlaxoSmithKline PLC
Assuming the 90 days horizon Pasithea Therapeutics Corp is expected to generate 3.82 times more return on investment than GlaxoSmithKline PLC. However, Pasithea Therapeutics is 3.82 times more volatile than GlaxoSmithKline PLC ADR. It trades about -0.09 of its potential returns per unit of risk. GlaxoSmithKline PLC ADR is currently generating about -0.33 per unit of risk. If you would invest 2.12 in Pasithea Therapeutics Corp on August 27, 2024 and sell it today you would lose (0.12) from holding Pasithea Therapeutics Corp or give up 5.66% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 47.62% |
| Values | Daily Returns |
Pasithea Therapeutics Corp vs. GlaxoSmithKline PLC ADR
Performance |
| Timeline |
| Pasithea Therapeutics |
| GlaxoSmithKline PLC ADR |
Pasithea Therapeutics and GlaxoSmithKline PLC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Pasithea Therapeutics and GlaxoSmithKline PLC
The main advantage of trading using opposite Pasithea Therapeutics and GlaxoSmithKline PLC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pasithea Therapeutics position performs unexpectedly, GlaxoSmithKline PLC 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 GlaxoSmithKline PLC will offset losses from the drop in GlaxoSmithKline PLC's long position.| Pasithea Therapeutics vs. Eliem Therapeutics | Pasithea Therapeutics vs. HCW Biologics | Pasithea Therapeutics vs. Scpharmaceuticals | Pasithea Therapeutics vs. Milestone Pharmaceuticals |
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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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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