Correlation Between Cardio Diagnostics and Capricor Therapeutics

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

Diversification Opportunities for Cardio Diagnostics and Capricor Therapeutics

-0.31

Correlation Coefficient

Cardio Diagnostics  Capricor Therapeutics

Very good diversification

The 3 months correlation between Cardio and Capricor is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding Cardio Diagnostics Holdings and Capricor Therapeutics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Capricor Therapeutics 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 Capricor Therapeutics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Capricor Therapeutics has no effect on the direction of Cardio Diagnostics i.e., Cardio Diagnostics and Capricor Therapeutics go up and down completely randomly.

Pair Corralation between Cardio Diagnostics and Capricor Therapeutics

Assuming the 90 days horizon Cardio Diagnostics Holdings is expected to generate 2.25 times more return on investment than Capricor Therapeutics. However, Cardio Diagnostics is 2.25 times more volatile than Capricor Therapeutics. It trades about 0.19 of its potential returns per unit of risk. Capricor Therapeutics is currently generating about 0.09 per unit of risk. If you would invest  2.91  in Cardio Diagnostics Holdings on September 25, 2024 and sell it today you would earn a total of  6.24  from holding Cardio Diagnostics Holdings or generate 214.43% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	95.31%
Values	Daily Returns

Cardio Diagnostics Holdings  vs.  Capricor Therapeutics

Cardio Diagnostics

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Cardio Diagnostics Holdings are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unsteady basic indicators, Cardio Diagnostics showed solid returns over the last few months and may actually be approaching a breakup point.

Capricor Therapeutics

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Capricor Therapeutics are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Even with relatively unsteady basic indicators, Capricor Therapeutics reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Cardio Diagnostics and Capricor Therapeutics

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

The idea behind Cardio Diagnostics Holdings and Capricor Therapeutics 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.