Correlation Between CAMP4 THERAPEUTICS and Frequency Electronics

Can any of the company-specific risk be diversified away by investing in both CAMP4 THERAPEUTICS and Frequency Electronics 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 CAMP4 THERAPEUTICS and Frequency Electronics into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between CAMP4 THERAPEUTICS PORATION and Frequency Electronics, you can compare the effects of market volatilities on CAMP4 THERAPEUTICS and Frequency Electronics 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 CAMP4 THERAPEUTICS with a short position of Frequency Electronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of CAMP4 THERAPEUTICS and Frequency Electronics.

Diversification Opportunities for CAMP4 THERAPEUTICS and Frequency Electronics

0.07

Correlation Coefficient

CAMP4 THERAPEUTICS  Frequency Electronics

Significant diversification

The 3 months correlation between CAMP4 and Frequency is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding CAMP4 THERAPEUTICS PORATION and Frequency Electronics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Frequency Electronics and CAMP4 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 CAMP4 THERAPEUTICS PORATION are associated (or correlated) with Frequency Electronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Frequency Electronics has no effect on the direction of CAMP4 THERAPEUTICS i.e., CAMP4 THERAPEUTICS and Frequency Electronics go up and down completely randomly.

Pair Corralation between CAMP4 THERAPEUTICS and Frequency Electronics

Given the investment horizon of 90 days CAMP4 THERAPEUTICS is expected to generate 1.49 times less return on investment than Frequency Electronics. In addition to that, CAMP4 THERAPEUTICS is 2.67 times more volatile than Frequency Electronics. It trades about 0.07 of its total potential returns per unit of risk. Frequency Electronics is currently generating about 0.27 per unit of volatility. If you would invest  1,312  in Frequency Electronics on September 21, 2024 and sell it today you would earn a total of  570.00  from holding Frequency Electronics or generate 43.45% return on investment over 90 days.

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

CAMP4 THERAPEUTICS PORATION  vs.  Frequency Electronics

CAMP4 THERAPEUTICS

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days CAMP4 THERAPEUTICS PORATION has generated negative risk-adjusted returns adding no value to investors with long positions. Even with inconsistent performance in the last few months, the Stock's primary indicators remain relatively invariable which may send shares a bit higher in January 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Frequency Electronics

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Frequency Electronics are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of very weak forward indicators, Frequency Electronics displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with CAMP4 THERAPEUTICS and Frequency Electronics

The main advantage of trading using opposite CAMP4 THERAPEUTICS and Frequency Electronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CAMP4 THERAPEUTICS position performs unexpectedly, Frequency Electronics 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 Frequency Electronics will offset losses from the drop in Frequency Electronics' long position.

The idea behind CAMP4 THERAPEUTICS PORATION and Frequency Electronics 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.