Correlation Between Cizzle Biotechnology and Smithson Investment

Can any of the company-specific risk be diversified away by investing in both Cizzle Biotechnology and Smithson Investment 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 Cizzle Biotechnology and Smithson Investment into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Cizzle Biotechnology Holdings and Smithson Investment Trust, you can compare the effects of market volatilities on Cizzle Biotechnology and Smithson Investment 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 Cizzle Biotechnology with a short position of Smithson Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cizzle Biotechnology and Smithson Investment.

Diversification Opportunities for Cizzle Biotechnology and Smithson Investment

-0.67

Correlation Coefficient

Cizzle Biotechnology  Smithson Investment

Excellent diversification

The 3 months correlation between Cizzle and Smithson is -0.67. Overlapping area represents the amount of risk that can be diversified away by holding Cizzle Biotechnology Holdings and Smithson Investment Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Smithson Investment Trust and Cizzle Biotechnology 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 Cizzle Biotechnology Holdings are associated (or correlated) with Smithson Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Smithson Investment Trust has no effect on the direction of Cizzle Biotechnology i.e., Cizzle Biotechnology and Smithson Investment go up and down completely randomly.

Pair Corralation between Cizzle Biotechnology and Smithson Investment

Assuming the 90 days trading horizon Cizzle Biotechnology is expected to generate 2.01 times less return on investment than Smithson Investment. In addition to that, Cizzle Biotechnology is 2.77 times more volatile than Smithson Investment Trust. It trades about 0.01 of its total potential returns per unit of risk. Smithson Investment Trust is currently generating about 0.05 per unit of volatility. If you would invest  130,300  in Smithson Investment Trust on September 14, 2024 and sell it today you would earn a total of  21,700  from holding Smithson Investment Trust or generate 16.65% return on investment over 90 days.

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

Cizzle Biotechnology Holdings  vs.  Smithson Investment Trust

Cizzle Biotechnology

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Cizzle Biotechnology Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's technical and fundamental indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Smithson Investment Trust

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Smithson Investment Trust are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady basic indicators, Smithson Investment may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Cizzle Biotechnology and Smithson Investment

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

The idea behind Cizzle Biotechnology Holdings and Smithson Investment Trust 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.