Correlation Between Jaguar Animal and Capricor Therapeutics

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

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

Diversification Opportunities for Jaguar Animal and Capricor Therapeutics

0.02

Correlation Coefficient

Jaguar Animal  Capricor Therapeutics

Significant diversification

The 3 months correlation between Jaguar and Capricor is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding Jaguar Animal Health and Capricor Therapeutics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Capricor Therapeutics and Jaguar Animal 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 Jaguar Animal Health 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 Jaguar Animal i.e., Jaguar Animal and Capricor Therapeutics go up and down completely randomly.

Pair Corralation between Jaguar Animal and Capricor Therapeutics

Given the investment horizon of 90 days Jaguar Animal Health is expected to generate 1.19 times more return on investment than Capricor Therapeutics. However, Jaguar Animal is 1.19 times more volatile than Capricor Therapeutics. It trades about -0.05 of its potential returns per unit of risk. Capricor Therapeutics is currently generating about -0.16 per unit of risk. If you would invest  118.00  in Jaguar Animal Health on September 19, 2024 and sell it today you would lose (27.04) from holding Jaguar Animal Health or give up 22.92% of portfolio value over 90 days.

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

Jaguar Animal Health  vs.  Capricor Therapeutics

Jaguar Animal Health

Risk-Adjusted Performance

0 of 100

Very Weak

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

Capricor Therapeutics

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Capricor Therapeutics are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Even with relatively inconsistent basic indicators, Capricor Therapeutics reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Jaguar Animal and Capricor Therapeutics

The main advantage of trading using opposite Jaguar Animal and Capricor Therapeutics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Jaguar Animal 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 Jaguar Animal Health 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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.