Correlation Between Ningbo MedicalSystem and Processa Pharmaceuticals

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

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

Diversification Opportunities for Ningbo MedicalSystem and Processa Pharmaceuticals

-0.57

Correlation Coefficient

Ningbo MedicalSystem  Processa Pharmaceuticals

Excellent diversification

The 3 months correlation between Ningbo and Processa is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding Ningbo MedicalSystem Biotechno and Processa Pharmaceuticals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Processa Pharmaceuticals and Ningbo MedicalSystem 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 Ningbo MedicalSystem Biotechnology are associated (or correlated) with Processa Pharmaceuticals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Processa Pharmaceuticals has no effect on the direction of Ningbo MedicalSystem i.e., Ningbo MedicalSystem and Processa Pharmaceuticals go up and down completely randomly.

Pair Corralation between Ningbo MedicalSystem and Processa Pharmaceuticals

Assuming the 90 days trading horizon Ningbo MedicalSystem Biotechnology is expected to under-perform the Processa Pharmaceuticals. But the stock apears to be less risky and, when comparing its historical volatility, Ningbo MedicalSystem Biotechnology is 8.4 times less risky than Processa Pharmaceuticals. The stock trades about -0.08 of its potential returns per unit of risk. The Processa Pharmaceuticals is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  22.00  in Processa Pharmaceuticals on August 17, 2025 and sell it today you would earn a total of  8.00  from holding Processa Pharmaceuticals or generate 36.36% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	92.19%
Values	Daily Returns

Ningbo MedicalSystem Biotechno  vs.  Processa Pharmaceuticals

Ningbo MedicalSystem

Risk-Adjusted Performance

Weakest

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

Processa Pharmaceuticals

Risk-Adjusted Performance

Fair

Compared to the overall equity markets, risk-adjusted returns on investments in Processa Pharmaceuticals are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Processa Pharmaceuticals sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Ningbo MedicalSystem and Processa Pharmaceuticals

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

The idea behind Ningbo MedicalSystem Biotechnology and Processa Pharmaceuticals 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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.