Correlation Between Globalfoundries and CERo Therapeutics

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

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

Diversification Opportunities for Globalfoundries and CERo Therapeutics

0.39

Correlation Coefficient

Globalfoundries  CERo Therapeutics

Weak diversification

The 3 months correlation between Globalfoundries and CERo is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding Globalfoundries and CERo Therapeutics Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CERo Therapeutics and Globalfoundries 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 Globalfoundries are associated (or correlated) with CERo Therapeutics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CERo Therapeutics has no effect on the direction of Globalfoundries i.e., Globalfoundries and CERo Therapeutics go up and down completely randomly.

Pair Corralation between Globalfoundries and CERo Therapeutics

Considering the 90-day investment horizon Globalfoundries is expected to generate 31.23 times less return on investment than CERo Therapeutics. But when comparing it to its historical volatility, Globalfoundries is 10.5 times less risky than CERo Therapeutics. It trades about 0.06 of its potential returns per unit of risk. CERo Therapeutics Holdings is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest  0.50  in CERo Therapeutics Holdings on September 27, 2024 and sell it today you would earn a total of  0.34  from holding CERo Therapeutics Holdings or generate 68.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	90.63%
Values	Daily Returns

Globalfoundries  vs.  CERo Therapeutics Holdings

Globalfoundries

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Globalfoundries are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively inconsistent technical and fundamental indicators, Globalfoundries may actually be approaching a critical reversion point that can send shares even higher in January 2025.

CERo Therapeutics

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in CERo Therapeutics Holdings are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of fairly fragile basic indicators, CERo Therapeutics showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Globalfoundries and CERo Therapeutics

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

The idea behind Globalfoundries and CERo Therapeutics Holdings 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 Global Correlations module to find global opportunities by holding instruments from different markets.