Correlation Between Shuttle Pharmaceuticals and Novartis

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

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

Diversification Opportunities for Shuttle Pharmaceuticals and Novartis

-0.29

Correlation Coefficient

Shuttle Pharmaceuticals  Novartis

Very good diversification

The 24 months correlation between Shuttle and Novartis is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding Shuttle Pharmaceuticals and Novartis AG ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Novartis AG ADR and Shuttle 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 Shuttle Pharmaceuticals are associated (or correlated) with Novartis. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Novartis AG ADR has no effect on the direction of Shuttle Pharmaceuticals i.e., Shuttle Pharmaceuticals and Novartis go up and down completely randomly.

Pair Corralation between Shuttle Pharmaceuticals and Novartis

Given the investment horizon of 90 days Shuttle Pharmaceuticals is expected to under-perform the Novartis. In addition to that, Shuttle Pharmaceuticals is 4.8 times more volatile than Novartis AG ADR. It trades about -0.06 of its total potential returns per unit of risk. Novartis AG ADR is currently generating about 0.04 per unit of volatility. If you would invest  8,732  in Novartis AG ADR on February 5, 2024 and sell it today you would earn a total of  995.00  from holding Novartis AG ADR or generate 11.39% return on investment over 90 days.

Time Period	24 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Shuttle Pharmaceuticals  vs.  Novartis AG ADR

Shuttle Pharmaceuticals

Risk-Adjusted Performance

0 of 100

Modest

Over the last 90 days Shuttle Pharmaceuticals has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in June 2024. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Novartis AG ADR

Risk-Adjusted Performance

3 of 100

Very Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Novartis AG ADR are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Novartis is not utilizing all of its potentials. The recent stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Shuttle Pharmaceuticals and Novartis

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

The idea behind Shuttle Pharmaceuticals and Novartis AG ADR 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 Anywhere module to track or share privately all of your investments from the convenience of any device.