Correlation Between Optical Cable and CAMP4 THERAPEUTICS

Can any of the company-specific risk be diversified away by investing in both Optical Cable and CAMP4 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 Optical Cable and CAMP4 THERAPEUTICS into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Optical Cable and CAMP4 THERAPEUTICS PORATION, you can compare the effects of market volatilities on Optical Cable and CAMP4 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 Optical Cable with a short position of CAMP4 THERAPEUTICS. Check out your portfolio center. Please also check ongoing floating volatility patterns of Optical Cable and CAMP4 THERAPEUTICS.

Diversification Opportunities for Optical Cable and CAMP4 THERAPEUTICS

-0.34

Correlation Coefficient

Optical Cable  CAMP4 THERAPEUTICS

Very good diversification

The 3 months correlation between Optical and CAMP4 is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding Optical Cable and CAMP4 THERAPEUTICS PORATION in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CAMP4 THERAPEUTICS and Optical Cable 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 Optical Cable are associated (or correlated) with CAMP4 THERAPEUTICS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CAMP4 THERAPEUTICS has no effect on the direction of Optical Cable i.e., Optical Cable and CAMP4 THERAPEUTICS go up and down completely randomly.

Pair Corralation between Optical Cable and CAMP4 THERAPEUTICS

Considering the 90-day investment horizon Optical Cable is expected to under-perform the CAMP4 THERAPEUTICS. But the stock apears to be less risky and, when comparing its historical volatility, Optical Cable is 6.36 times less risky than CAMP4 THERAPEUTICS. The stock trades about -0.18 of its potential returns per unit of risk. The CAMP4 THERAPEUTICS PORATION is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  533.00  in CAMP4 THERAPEUTICS PORATION on September 21, 2024 and sell it today you would lose (13.00) from holding CAMP4 THERAPEUTICS PORATION or give up 2.44% of portfolio value over 90 days.

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

Optical Cable  vs.  CAMP4 THERAPEUTICS PORATION

Optical Cable

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Optical Cable has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of inconsistent performance in the last few months, the Stock's fundamental indicators remain rather sound which may send shares a bit higher in January 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

CAMP4 THERAPEUTICS

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days CAMP4 THERAPEUTICS PORATION has generated negative risk-adjusted returns adding no value to investors with long positions. Even with inconsistent performance in the last few months, the Stock's primary indicators remain relatively invariable which may send shares a bit higher in January 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Pair Trading with Optical Cable and CAMP4 THERAPEUTICS

The main advantage of trading using opposite Optical Cable and CAMP4 THERAPEUTICS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Optical Cable position performs unexpectedly, CAMP4 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 CAMP4 THERAPEUTICS will offset losses from the drop in CAMP4 THERAPEUTICS's long position.

The idea behind Optical Cable and CAMP4 THERAPEUTICS PORATION 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.