Correlation Between Cognition Therapeutics and Gracell Biotechnologies

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

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

Diversification Opportunities for Cognition Therapeutics and Gracell Biotechnologies

-0.18

Correlation Coefficient

Cognition Therapeutics  Gracell Biotechnologies

Good diversification

The 3 months correlation between Cognition and Gracell is -0.18. Overlapping area represents the amount of risk that can be diversified away by holding Cognition Therapeutics and Gracell Biotechnologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gracell Biotechnologies and Cognition 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 Cognition Therapeutics are associated (or correlated) with Gracell Biotechnologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gracell Biotechnologies has no effect on the direction of Cognition Therapeutics i.e., Cognition Therapeutics and Gracell Biotechnologies go up and down completely randomly.

Pair Corralation between Cognition Therapeutics and Gracell Biotechnologies

If you would invest  402.00  in Gracell Biotechnologies on September 16, 2024 and sell it today you would earn a total of  0.00  from holding Gracell Biotechnologies or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	1.54%
Values	Daily Returns

Cognition Therapeutics  vs.  Gracell Biotechnologies

Cognition Therapeutics

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Cognition Therapeutics has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest inconsistent performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Gracell Biotechnologies

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Gracell Biotechnologies has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent fundamental indicators, Gracell Biotechnologies is not utilizing all of its potentials. The current stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Cognition Therapeutics and Gracell Biotechnologies

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

The idea behind Cognition Therapeutics and Gracell Biotechnologies 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 Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..