Correlation Between Bolt Biotherapeutics and Capricor Therapeutics

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

By analyzing existing cross correlation between Bolt Biotherapeutics and Capricor Therapeutics, you can compare the effects of market volatilities on Bolt Biotherapeutics and Capricor 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 Bolt Biotherapeutics with a short position of Capricor Therapeutics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bolt Biotherapeutics and Capricor Therapeutics.

Diversification Opportunities for Bolt Biotherapeutics and Capricor Therapeutics

-0.04

Correlation Coefficient

Bolt Biotherapeutics  Capricor Therapeutics

Good diversification

The 3 months correlation between Bolt and Capricor is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding Bolt Biotherapeutics and Capricor Therapeutics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Capricor Therapeutics and Bolt Biotherapeutics 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 Bolt Biotherapeutics are associated (or correlated) with Capricor Therapeutics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Capricor Therapeutics has no effect on the direction of Bolt Biotherapeutics i.e., Bolt Biotherapeutics and Capricor Therapeutics go up and down completely randomly.

Pair Corralation between Bolt Biotherapeutics and Capricor Therapeutics

Given the investment horizon of 90 days Bolt Biotherapeutics is expected to under-perform the Capricor Therapeutics. But the stock apears to be less risky and, when comparing its historical volatility, Bolt Biotherapeutics is 4.38 times less risky than Capricor Therapeutics. The stock trades about -0.02 of its potential returns per unit of risk. The Capricor Therapeutics is currently generating about 0.25 of returns per unit of risk over similar time horizon. If you would invest  437.00  in Capricor Therapeutics on September 1, 2024 and sell it today you would earn a total of  1,464  from holding Capricor Therapeutics or generate 335.01% return on investment over 90 days.

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

Bolt Biotherapeutics  vs.  Capricor Therapeutics

Bolt Biotherapeutics

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Bolt Biotherapeutics has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable essential indicators, Bolt Biotherapeutics is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Capricor Therapeutics

Risk-Adjusted Performance

19 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Capricor Therapeutics are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. Even with relatively inconsistent basic indicators, Capricor Therapeutics reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Bolt Biotherapeutics and Capricor Therapeutics

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

The idea behind Bolt Biotherapeutics and Capricor Therapeutics 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.