Correlation Between Cumberland Pharmaceuticals and Adamis Pharma

Can any of the company-specific risk be diversified away by investing in both Cumberland Pharmaceuticals and Adamis Pharma 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 Cumberland Pharmaceuticals and Adamis Pharma into the same portfolio, which is an essential part of the fundamental portfolio management process.

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

Diversification Opportunities for Cumberland Pharmaceuticals and Adamis Pharma

-0.02

Correlation Coefficient

Cumberland Pharmaceuticals  Adamis Pharma

Good diversification

The 3 months correlation between Cumberland and Adamis is -0.02. Overlapping area represents the amount of risk that can be diversified away by holding Cumberland Pharmaceuticals and Adamis Pharma in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Adamis Pharma and Cumberland Pharmaceuticals 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 Cumberland Pharmaceuticals are associated (or correlated) with Adamis Pharma. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Adamis Pharma has no effect on the direction of Cumberland Pharmaceuticals i.e., Cumberland Pharmaceuticals and Adamis Pharma go up and down completely randomly.

Pair Corralation between Cumberland Pharmaceuticals and Adamis Pharma

If you would invest  129.00  in Cumberland Pharmaceuticals on September 13, 2024 and sell it today you would earn a total of  113.00  from holding Cumberland Pharmaceuticals or generate 87.6% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	1.59%
Values	Daily Returns

Cumberland Pharmaceuticals  vs.  Adamis Pharma

Cumberland Pharmaceuticals

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Cumberland Pharmaceuticals are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak forward indicators, Cumberland Pharmaceuticals showed solid returns over the last few months and may actually be approaching a breakup point.

Adamis Pharma

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Adamis Pharma has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable primary indicators, Adamis Pharma is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Cumberland Pharmaceuticals and Adamis Pharma

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

The idea behind Cumberland Pharmaceuticals and Adamis Pharma 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.