Correlation Between Applied Molecular and Cingulate

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

By analyzing existing cross correlation between Applied Molecular Transport and Cingulate, you can compare the effects of market volatilities on Applied Molecular and Cingulate 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 Applied Molecular with a short position of Cingulate. Check out your portfolio center. Please also check ongoing floating volatility patterns of Applied Molecular and Cingulate.

Diversification Opportunities for Applied Molecular and Cingulate

0.46

Correlation Coefficient

Applied Molecular  Cingulate

Very weak diversification

The 3 months correlation between Applied and Cingulate is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding Applied Molecular Transport and Cingulate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cingulate and Applied Molecular 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 Applied Molecular Transport are associated (or correlated) with Cingulate. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cingulate has no effect on the direction of Applied Molecular i.e., Applied Molecular and Cingulate go up and down completely randomly.

Pair Corralation between Applied Molecular and Cingulate

Given the investment horizon of 90 days Applied Molecular Transport is expected to under-perform the Cingulate. But the stock apears to be less risky and, when comparing its historical volatility, Applied Molecular Transport is 2.25 times less risky than Cingulate. The stock trades about -0.02 of its potential returns per unit of risk. The Cingulate is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  23,400  in Cingulate on October 11, 2024 and sell it today you would lose (22,969) from holding Cingulate or give up 98.16% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	25.86%
Values	Daily Returns

Applied Molecular Transport  vs.  Cingulate

Applied Molecular

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Applied Molecular Transport has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong basic indicators, Applied Molecular is not utilizing all of its potentials. The recent stock price confusion, may contribute to short-horizon losses for the traders.

Cingulate

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Cingulate has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Cingulate is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Applied Molecular and Cingulate

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

The idea behind Applied Molecular Transport and Cingulate 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.