Correlation Between CohBar and Reata Pharmaceuticals

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

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

Diversification Opportunities for CohBar and Reata Pharmaceuticals

0.22

Correlation Coefficient

CohBar  Reata Pharmaceuticals

Modest diversification

The 3 months correlation between CohBar and Reata is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding CohBar Inc and Reata Pharmaceuticals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Reata Pharmaceuticals and CohBar 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 CohBar Inc are associated (or correlated) with Reata Pharmaceuticals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Reata Pharmaceuticals has no effect on the direction of CohBar i.e., CohBar and Reata Pharmaceuticals go up and down completely randomly.

Pair Corralation between CohBar and Reata Pharmaceuticals

If you would invest  10,967  in Reata Pharmaceuticals on September 1, 2024 and sell it today you would earn a total of  0.00  from holding Reata Pharmaceuticals or generate 0.0% return on investment over 90 days.

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

CohBar Inc  vs.  Reata Pharmaceuticals

CohBar Inc

Risk-Adjusted Performance

0 of 100

Very Weak

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

Reata Pharmaceuticals

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Reata Pharmaceuticals has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Reata Pharmaceuticals is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with CohBar and Reata Pharmaceuticals

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

The idea behind CohBar Inc and Reata Pharmaceuticals 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.