Correlation Between Hookipa Pharma and Capricor Therapeutics

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

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

Diversification Opportunities for Hookipa Pharma and Capricor Therapeutics

0.18

Correlation Coefficient

Hookipa Pharma  Capricor Therapeutics

Average diversification

The 3 months correlation between Hookipa and Capricor is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding Hookipa Pharma and Capricor Therapeutics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Capricor Therapeutics and Hookipa Pharma 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 Hookipa Pharma are associated (or correlated) with Capricor Therapeutics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Capricor Therapeutics has no effect on the direction of Hookipa Pharma i.e., Hookipa Pharma and Capricor Therapeutics go up and down completely randomly.

Pair Corralation between Hookipa Pharma and Capricor Therapeutics

Given the investment horizon of 90 days Hookipa Pharma is expected to under-perform the Capricor Therapeutics. But the stock apears to be less risky and, when comparing its historical volatility, Hookipa Pharma is 2.45 times less risky than Capricor Therapeutics. The stock trades about -0.29 of its potential returns per unit of risk. The Capricor Therapeutics is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  999.00  in Capricor Therapeutics on September 26, 2024 and sell it today you would earn a total of  402.00  from holding Capricor Therapeutics or generate 40.24% return on investment over 90 days.

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

Hookipa Pharma  vs.  Capricor Therapeutics

Hookipa Pharma

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Hookipa Pharma has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unfluctuating performance in the last few months, the Stock's basic indicators remain quite persistent which may send shares a bit higher in January 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Capricor Therapeutics

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Capricor Therapeutics are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Even with relatively unsteady basic indicators, Capricor Therapeutics reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Hookipa Pharma and Capricor Therapeutics

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

The idea behind Hookipa Pharma and Capricor Therapeutics 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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.