Correlation Between Capricor Therapeutics and VectivBio Holding

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

By analyzing existing cross correlation between Capricor Therapeutics and VectivBio Holding AG, you can compare the effects of market volatilities on Capricor Therapeutics and VectivBio Holding 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 VectivBio Holding. Check out your portfolio center. Please also check ongoing floating volatility patterns of Capricor Therapeutics and VectivBio Holding.

Diversification Opportunities for Capricor Therapeutics and VectivBio Holding

0.85

Correlation Coefficient

Capricor Therapeutics  VectivBio Holding

Very poor diversification

The 3 months correlation between Capricor and VectivBio is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Capricor Therapeutics and VectivBio Holding AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on VectivBio Holding 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 VectivBio Holding. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of VectivBio Holding has no effect on the direction of Capricor Therapeutics i.e., Capricor Therapeutics and VectivBio Holding go up and down completely randomly.

Pair Corralation between Capricor Therapeutics and VectivBio Holding

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 Together
Strength	Strong
Accuracy	1.59%
Values	Daily Returns

Capricor Therapeutics  vs.  VectivBio Holding AG

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.

VectivBio Holding

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Capricor Therapeutics and VectivBio Holding

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

The idea behind Capricor Therapeutics and VectivBio Holding AG 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.