Correlation Between ContraFect Corp and Cyclerion Therapeutics

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

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

Diversification Opportunities for ContraFect Corp and Cyclerion Therapeutics

0.61

Correlation Coefficient

ContraFect Corp  Cyclerion Therapeutics

Poor diversification

The 3 months correlation between ContraFect and Cyclerion is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding ContraFect Corp and Cyclerion Therapeutics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cyclerion Therapeutics and ContraFect Corp 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 ContraFect Corp are associated (or correlated) with Cyclerion Therapeutics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cyclerion Therapeutics has no effect on the direction of ContraFect Corp i.e., ContraFect Corp and Cyclerion Therapeutics go up and down completely randomly.

Pair Corralation between ContraFect Corp and Cyclerion Therapeutics

If you would invest  288.00  in Cyclerion Therapeutics on September 3, 2024 and sell it today you would lose (68.00) from holding Cyclerion Therapeutics or give up 23.61% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	1.56%
Values	Daily Returns

ContraFect Corp  vs.  Cyclerion Therapeutics

ContraFect Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ContraFect Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, ContraFect Corp is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Cyclerion Therapeutics

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Cyclerion Therapeutics are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating fundamental indicators, Cyclerion Therapeutics displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with ContraFect Corp and Cyclerion Therapeutics

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

The idea behind ContraFect Corp and Cyclerion 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.

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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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.