Correlation Between Sunshine Biopharma and Cyclo Therapeutics

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

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

Diversification Opportunities for Sunshine Biopharma and Cyclo Therapeutics

-0.39

Correlation Coefficient

Sunshine Biopharma  Cyclo Therapeutics

Very good diversification

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

Pair Corralation between Sunshine Biopharma and Cyclo Therapeutics

Assuming the 90 days horizon Sunshine Biopharma Warrant is expected to generate 5.21 times more return on investment than Cyclo Therapeutics. However, Sunshine Biopharma is 5.21 times more volatile than Cyclo Therapeutics. It trades about 0.16 of its potential returns per unit of risk. Cyclo Therapeutics is currently generating about 0.01 per unit of risk. If you would invest  11.00  in Sunshine Biopharma Warrant on September 12, 2024 and sell it today you would earn a total of  11.80  from holding Sunshine Biopharma Warrant or generate 107.27% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	90.48%
Values	Daily Returns

Sunshine Biopharma Warrant  vs.  Cyclo Therapeutics

Sunshine Biopharma

Risk-Adjusted Performance

12 of 100

Good

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

Cyclo Therapeutics

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Cyclo Therapeutics are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite fairly strong basic indicators, Cyclo Therapeutics is not utilizing all of its potentials. The current stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with Sunshine Biopharma and Cyclo Therapeutics

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

The idea behind Sunshine Biopharma Warrant and Cyclo 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.