Correlation Between Cardio Diagnostics and Fortress Biotech

Can any of the company-specific risk be diversified away by investing in both Cardio Diagnostics and Fortress Biotech 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 Fortress Biotech 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 Fortress Biotech, you can compare the effects of market volatilities on Cardio Diagnostics and Fortress Biotech 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 Fortress Biotech. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cardio Diagnostics and Fortress Biotech.

Diversification Opportunities for Cardio Diagnostics and Fortress Biotech

0.38

Correlation Coefficient

Cardio Diagnostics  Fortress Biotech

Weak diversification

The 3 months correlation between Cardio and Fortress is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding Cardio Diagnostics Holdings and Fortress Biotech in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fortress Biotech 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 Fortress Biotech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fortress Biotech has no effect on the direction of Cardio Diagnostics i.e., Cardio Diagnostics and Fortress Biotech go up and down completely randomly.

Pair Corralation between Cardio Diagnostics and Fortress Biotech

Given the investment horizon of 90 days Cardio Diagnostics Holdings is expected to generate 2.19 times more return on investment than Fortress Biotech. However, Cardio Diagnostics is 2.19 times more volatile than Fortress Biotech. It trades about 0.03 of its potential returns per unit of risk. Fortress Biotech is currently generating about -0.01 per unit of risk. If you would invest  129.00  in Cardio Diagnostics Holdings on September 4, 2024 and sell it today you would lose (99.00) from holding Cardio Diagnostics Holdings or give up 76.74% of portfolio value over 90 days.

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

Cardio Diagnostics Holdings  vs.  Fortress Biotech

Cardio Diagnostics

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Cardio Diagnostics Holdings are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of very weak forward indicators, Cardio Diagnostics may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Fortress Biotech

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Fortress Biotech are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of very conflicting forward indicators, Fortress Biotech displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Cardio Diagnostics and Fortress Biotech

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

The idea behind Cardio Diagnostics Holdings and Fortress Biotech 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.