Correlation Between Republic Bancorp and CERo Therapeutics

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

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

Diversification Opportunities for Republic Bancorp and CERo Therapeutics

0.61

Correlation Coefficient

Republic Bancorp  CERo Therapeutics

Poor diversification

The 3 months correlation between Republic and CERo is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Republic Bancorp and CERo Therapeutics Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CERo Therapeutics and Republic Bancorp 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 Republic Bancorp 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 Republic Bancorp i.e., Republic Bancorp and CERo Therapeutics go up and down completely randomly.

Pair Corralation between Republic Bancorp and CERo Therapeutics

Assuming the 90 days horizon Republic Bancorp is expected to generate 25.92 times less return on investment than CERo Therapeutics. But when comparing it to its historical volatility, Republic Bancorp is 14.05 times less risky than CERo Therapeutics. It trades about 0.07 of its potential returns per unit of risk. CERo Therapeutics Holdings is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest  1.20  in CERo Therapeutics Holdings on September 23, 2024 and sell it today you would lose (0.30) from holding CERo Therapeutics Holdings or give up 25.0% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	89.23%
Values	Daily Returns

Republic Bancorp  vs.  CERo Therapeutics Holdings

Republic Bancorp

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Republic Bancorp are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat unfluctuating basic indicators, Republic Bancorp may actually be approaching a critical reversion point that can send shares even higher in January 2025.

CERo Therapeutics

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in CERo Therapeutics Holdings are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of fairly uncertain basic indicators, CERo Therapeutics showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Republic Bancorp and CERo Therapeutics

The main advantage of trading using opposite Republic Bancorp and CERo Therapeutics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Republic Bancorp 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 Republic Bancorp 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.

Check out your portfolio center.

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 Transaction History module to view history of all your transactions and understand their impact on performance.