Correlation Between 180 Life and Cardio Diagnostics

Can any of the company-specific risk be diversified away by investing in both 180 Life and Cardio Diagnostics 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 180 Life and Cardio Diagnostics into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between 180 Life Sciences and Cardio Diagnostics Holdings, you can compare the effects of market volatilities on 180 Life and Cardio Diagnostics 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 180 Life with a short position of Cardio Diagnostics. Check out your portfolio center. Please also check ongoing floating volatility patterns of 180 Life and Cardio Diagnostics.

Diversification Opportunities for 180 Life and Cardio Diagnostics

0.81

Correlation Coefficient

180 Life  Cardio Diagnostics

Very poor diversification

The 3 months correlation between 180 and Cardio is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding 180 Life Sciences and Cardio Diagnostics Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cardio Diagnostics and 180 Life 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 180 Life Sciences are associated (or correlated) with Cardio Diagnostics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cardio Diagnostics has no effect on the direction of 180 Life i.e., 180 Life and Cardio Diagnostics go up and down completely randomly.

Pair Corralation between 180 Life and Cardio Diagnostics

Given the investment horizon of 90 days 180 Life Sciences is expected to under-perform the Cardio Diagnostics. But the stock apears to be less risky and, when comparing its historical volatility, 180 Life Sciences is 2.11 times less risky than Cardio Diagnostics. The stock trades about -0.23 of its potential returns per unit of risk. The Cardio Diagnostics Holdings is currently generating about -0.08 of returns per unit of risk over similar time horizon. If you would invest  82.00  in Cardio Diagnostics Holdings on December 28, 2024 and sell it today you would lose (39.00) from holding Cardio Diagnostics Holdings or give up 47.56% of portfolio value over 90 days.

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

180 Life Sciences  vs.  Cardio Diagnostics Holdings

180 Life Sciences

Risk-Adjusted Performance

Very Weak

Over the last 90 days 180 Life Sciences has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Cardio Diagnostics

Risk-Adjusted Performance

Very Weak

Over the last 90 days Cardio Diagnostics Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's forward indicators remain very healthy which may send shares a bit higher in April 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with 180 Life and Cardio Diagnostics

The main advantage of trading using opposite 180 Life and Cardio Diagnostics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if 180 Life position performs unexpectedly, Cardio Diagnostics 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 Cardio Diagnostics will offset losses from the drop in Cardio Diagnostics' long position.

The idea behind 180 Life Sciences and Cardio Diagnostics 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.

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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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.