Correlation Between Capricor Therapeutics and Jaguar Animal

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

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

Diversification Opportunities for Capricor Therapeutics and Jaguar Animal

0.05

Correlation Coefficient

Capricor Therapeutics  Jaguar Animal

Significant diversification

The 3 months correlation between Capricor and Jaguar is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding Capricor Therapeutics and Jaguar Animal Health in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jaguar Animal Health and Capricor 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 Capricor Therapeutics are associated (or correlated) with Jaguar Animal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jaguar Animal Health has no effect on the direction of Capricor Therapeutics i.e., Capricor Therapeutics and Jaguar Animal go up and down completely randomly.

Pair Corralation between Capricor Therapeutics and Jaguar Animal

Given the investment horizon of 90 days Capricor Therapeutics is expected to generate 1.83 times more return on investment than Jaguar Animal. However, Capricor Therapeutics is 1.83 times more volatile than Jaguar Animal Health. It trades about 0.17 of its potential returns per unit of risk. Jaguar Animal Health is currently generating about -0.02 per unit of risk. If you would invest  505.00  in Capricor Therapeutics on September 20, 2024 and sell it today you would earn a total of  747.00  from holding Capricor Therapeutics or generate 147.92% return on investment over 90 days.

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

Capricor Therapeutics  vs.  Jaguar Animal Health

Capricor Therapeutics

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Capricor Therapeutics are ranked lower than 13 (%) 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.

Jaguar Animal Health

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Jaguar Animal Health has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's technical and fundamental indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with Capricor Therapeutics and Jaguar Animal

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

The idea behind Capricor Therapeutics and Jaguar Animal Health 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.