Correlation Between Burning Rock and Capricor Therapeutics

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

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

Diversification Opportunities for Burning Rock and Capricor Therapeutics

-0.73

Correlation Coefficient

Burning Rock  Capricor Therapeutics

Pay attention - limited upside

The 3 months correlation between Burning and Capricor is -0.73. Overlapping area represents the amount of risk that can be diversified away by holding Burning Rock Biotech and Capricor Therapeutics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Capricor Therapeutics and Burning Rock 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 Burning Rock Biotech 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 Burning Rock i.e., Burning Rock and Capricor Therapeutics go up and down completely randomly.

Pair Corralation between Burning Rock and Capricor Therapeutics

Considering the 90-day investment horizon Burning Rock Biotech is expected to under-perform the Capricor Therapeutics. But the stock apears to be less risky and, when comparing its historical volatility, Burning Rock Biotech is 1.16 times less risky than Capricor Therapeutics. The stock trades about -0.03 of its potential returns per unit of risk. The Capricor Therapeutics is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  425.00  in Capricor Therapeutics on October 21, 2024 and sell it today you would earn a total of  945.00  from holding Capricor Therapeutics or generate 222.35% return on investment over 90 days.

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

Burning Rock Biotech  vs.  Capricor Therapeutics

Burning Rock Biotech

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Burning Rock Biotech are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Burning Rock reported solid returns over the last few months and may actually be approaching a breakup point.

Capricor Therapeutics

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Capricor Therapeutics has generated negative risk-adjusted returns adding no value to investors with long positions. Even with inconsistent performance in the last few months, the Stock's basic indicators remain relatively invariable which may send shares a bit higher in February 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Pair Trading with Burning Rock and Capricor Therapeutics

The main advantage of trading using opposite Burning Rock and Capricor Therapeutics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Burning Rock 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 Burning Rock Biotech 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.