Correlation Between Cumberland Pharmaceuticals and Inflection Point

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

By analyzing existing cross correlation between Cumberland Pharmaceuticals and Inflection Point Acquisition, you can compare the effects of market volatilities on Cumberland Pharmaceuticals and Inflection Point 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 Inflection Point. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cumberland Pharmaceuticals and Inflection Point.

Diversification Opportunities for Cumberland Pharmaceuticals and Inflection Point

-0.27

Correlation Coefficient

Cumberland Pharmaceuticals  Inflection Point

Very good diversification

The 3 months correlation between Cumberland and Inflection is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding Cumberland Pharmaceuticals and Inflection Point Acquisition in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Inflection Point Acq 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 Inflection Point. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Inflection Point Acq has no effect on the direction of Cumberland Pharmaceuticals i.e., Cumberland Pharmaceuticals and Inflection Point go up and down completely randomly.

Pair Corralation between Cumberland Pharmaceuticals and Inflection Point

Given the investment horizon of 90 days Cumberland Pharmaceuticals is expected to under-perform the Inflection Point. In addition to that, Cumberland Pharmaceuticals is 21.38 times more volatile than Inflection Point Acquisition. It trades about 0.0 of its total potential returns per unit of risk. Inflection Point Acquisition is currently generating about 0.2 per unit of volatility. If you would invest  1,075  in Inflection Point Acquisition on September 5, 2024 and sell it today you would earn a total of  25.00  from holding Inflection Point Acquisition or generate 2.33% return on investment over 90 days.

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

Cumberland Pharmaceuticals  vs.  Inflection Point Acquisition

Cumberland Pharmaceuticals

Risk-Adjusted Performance

0 of 100

Very Weak

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

Inflection Point Acq

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Inflection Point Acquisition are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Inflection Point is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Cumberland Pharmaceuticals and Inflection Point

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

The idea behind Cumberland Pharmaceuticals and Inflection Point Acquisition 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 Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.