Correlation Between Cardio Diagnostics and Precision BioSciences

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

By analyzing existing cross correlation between Cardio Diagnostics Holdings and Precision BioSciences, you can compare the effects of market volatilities on Cardio Diagnostics and Precision BioSciences 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 Cardio Diagnostics with a short position of Precision BioSciences. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cardio Diagnostics and Precision BioSciences.

Diversification Opportunities for Cardio Diagnostics and Precision BioSciences

0.02

Correlation Coefficient

Cardio Diagnostics  Precision BioSciences

Significant diversification

The 3 months correlation between Cardio and Precision is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding Cardio Diagnostics Holdings and Precision BioSciences in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Precision BioSciences and Cardio Diagnostics 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 Cardio Diagnostics Holdings are associated (or correlated) with Precision BioSciences. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Precision BioSciences has no effect on the direction of Cardio Diagnostics i.e., Cardio Diagnostics and Precision BioSciences go up and down completely randomly.

Pair Corralation between Cardio Diagnostics and Precision BioSciences

Given the investment horizon of 90 days Cardio Diagnostics Holdings is expected to generate 2.26 times more return on investment than Precision BioSciences. However, Cardio Diagnostics is 2.26 times more volatile than Precision BioSciences. It trades about 0.08 of its potential returns per unit of risk. Precision BioSciences is currently generating about -0.27 per unit of risk. If you would invest  28.00  in Cardio Diagnostics Holdings on September 5, 2024 and sell it today you would earn a total of  2.00  from holding Cardio Diagnostics Holdings or generate 7.14% return on investment over 90 days.

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

Cardio Diagnostics Holdings  vs.  Precision BioSciences

Cardio Diagnostics

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Cardio Diagnostics Holdings are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of very weak forward indicators, Cardio Diagnostics displayed solid returns over the last few months and may actually be approaching a breakup point.

Precision BioSciences

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Precision BioSciences 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 forward indicators remain quite persistent which may send shares a bit higher in January 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Pair Trading with Cardio Diagnostics and Precision BioSciences

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

The idea behind Cardio Diagnostics Holdings and Precision BioSciences 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.