Correlation Between COSMO Pharmaceuticals and Newron Pharmaceuticals

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

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

Diversification Opportunities for COSMO Pharmaceuticals and Newron Pharmaceuticals

-0.59

Correlation Coefficient

COSMO Pharmaceuticals  Newron Pharmaceuticals

Excellent diversification

The 3 months correlation between COSMO and Newron is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding COSMO Pharmaceuticals SA and Newron Pharmaceuticals SpA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Newron Pharmaceuticals and COSMO 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 COSMO Pharmaceuticals SA are associated (or correlated) with Newron Pharmaceuticals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Newron Pharmaceuticals has no effect on the direction of COSMO Pharmaceuticals i.e., COSMO Pharmaceuticals and Newron Pharmaceuticals go up and down completely randomly.

Pair Corralation between COSMO Pharmaceuticals and Newron Pharmaceuticals

Assuming the 90 days trading horizon COSMO Pharmaceuticals SA is expected to generate 1.02 times more return on investment than Newron Pharmaceuticals. However, COSMO Pharmaceuticals is 1.02 times more volatile than Newron Pharmaceuticals SpA. It trades about 0.19 of its potential returns per unit of risk. Newron Pharmaceuticals SpA is currently generating about 0.0 per unit of risk. If you would invest  4,600  in COSMO Pharmaceuticals SA on April 25, 2025 and sell it today you would earn a total of  1,500  from holding COSMO Pharmaceuticals SA or generate 32.61% return on investment over 90 days.

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

COSMO Pharmaceuticals SA  vs.  Newron Pharmaceuticals SpA

COSMO Pharmaceuticals

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in COSMO Pharmaceuticals SA are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, COSMO Pharmaceuticals showed solid returns over the last few months and may actually be approaching a breakup point.

Newron Pharmaceuticals

Risk-Adjusted Performance

Very Weak

Over the last 90 days Newron Pharmaceuticals SpA has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Newron Pharmaceuticals is not utilizing all of its potentials. The current stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with COSMO Pharmaceuticals and Newron Pharmaceuticals

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

The idea behind COSMO Pharmaceuticals SA and Newron Pharmaceuticals SpA 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 AI Portfolio Prophet module to use AI to generate optimal portfolios and find profitable investment opportunities.