Correlation Between Cumberland Pharmaceuticals and Micromobility

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

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

Diversification Opportunities for Cumberland Pharmaceuticals and Micromobility

0.62

Correlation Coefficient

Cumberland Pharmaceuticals  Micromobility

Poor diversification

The 3 months correlation between Cumberland and Micromobility is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Cumberland Pharmaceuticals and Micromobility in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Micromobility 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 Micromobility. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Micromobility has no effect on the direction of Cumberland Pharmaceuticals i.e., Cumberland Pharmaceuticals and Micromobility go up and down completely randomly.

Pair Corralation between Cumberland Pharmaceuticals and Micromobility

If you would invest  135.00  in Cumberland Pharmaceuticals on September 3, 2024 and sell it today you would earn a total of  5.00  from holding Cumberland Pharmaceuticals or generate 3.7% return on investment over 90 days.

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

Cumberland Pharmaceuticals  vs.  Micromobility

Cumberland Pharmaceuticals

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Cumberland Pharmaceuticals are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak forward indicators, Cumberland Pharmaceuticals may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Micromobility

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Micromobility has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Micromobility is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Cumberland Pharmaceuticals and Micromobility

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

The idea behind Cumberland Pharmaceuticals and Micromobility 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.

Check out your portfolio center.

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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.