Correlation Between Tonix Pharmaceuticals and Capricor Therapeutics

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

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

Diversification Opportunities for Tonix Pharmaceuticals and Capricor Therapeutics

-0.03

Correlation Coefficient

Tonix Pharmaceuticals  Capricor Therapeutics

Good diversification

The 3 months correlation between Tonix and Capricor is -0.03. Overlapping area represents the amount of risk that can be diversified away by holding Tonix Pharmaceuticals Holding and Capricor Therapeutics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Capricor Therapeutics and Tonix Pharmaceuticals 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 Tonix Pharmaceuticals Holding 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 Tonix Pharmaceuticals i.e., Tonix Pharmaceuticals and Capricor Therapeutics go up and down completely randomly.

Pair Corralation between Tonix Pharmaceuticals and Capricor Therapeutics

Given the investment horizon of 90 days Tonix Pharmaceuticals Holding is expected to generate 3.4 times more return on investment than Capricor Therapeutics. However, Tonix Pharmaceuticals is 3.4 times more volatile than Capricor Therapeutics. It trades about 0.15 of its potential returns per unit of risk. Capricor Therapeutics is currently generating about -0.16 per unit of risk. If you would invest  19.00  in Tonix Pharmaceuticals Holding on September 19, 2024 and sell it today you would earn a total of  20.38  from holding Tonix Pharmaceuticals Holding or generate 107.26% return on investment over 90 days.

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

Tonix Pharmaceuticals Holding  vs.  Capricor Therapeutics

Tonix Pharmaceuticals

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Tonix Pharmaceuticals Holding are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Even with relatively unfluctuating basic indicators, Tonix Pharmaceuticals reported solid returns over the last few months and may actually be approaching a breakup point.

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 Tonix Pharmaceuticals and Capricor Therapeutics

The main advantage of trading using opposite Tonix Pharmaceuticals and Capricor Therapeutics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tonix Pharmaceuticals 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 Tonix Pharmaceuticals Holding 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.