Correlation Between VectivBio Holding and Capricor Therapeutics

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

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

Diversification Opportunities for VectivBio Holding and Capricor Therapeutics

0.85

Correlation Coefficient

VectivBio Holding  Capricor Therapeutics

Very poor diversification

The 3 months correlation between VectivBio and Capricor is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding VectivBio Holding AG and Capricor Therapeutics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Capricor Therapeutics and VectivBio Holding 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 VectivBio Holding AG 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 VectivBio Holding i.e., VectivBio Holding and Capricor Therapeutics go up and down completely randomly.

Pair Corralation between VectivBio Holding and Capricor Therapeutics

If you would invest  437.00  in Capricor Therapeutics on September 3, 2024 and sell it today you would earn a total of  1,464  from holding Capricor Therapeutics or generate 335.01% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	1.56%
Values	Daily Returns

VectivBio Holding AG  vs.  Capricor Therapeutics

VectivBio Holding

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days VectivBio Holding AG has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable fundamental indicators, VectivBio Holding is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Capricor Therapeutics

Risk-Adjusted Performance

19 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Capricor Therapeutics are ranked lower than 19 (%) 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 VectivBio Holding and Capricor Therapeutics

The main advantage of trading using opposite VectivBio Holding and Capricor Therapeutics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if VectivBio Holding 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 VectivBio Holding AG 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.