Correlation Between CAMP4 THERAPEUTICS and Optical Cable

Can any of the company-specific risk be diversified away by investing in both CAMP4 THERAPEUTICS and Optical Cable 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 CAMP4 THERAPEUTICS and Optical Cable into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between CAMP4 THERAPEUTICS PORATION and Optical Cable, you can compare the effects of market volatilities on CAMP4 THERAPEUTICS and Optical Cable 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 CAMP4 THERAPEUTICS with a short position of Optical Cable. Check out your portfolio center. Please also check ongoing floating volatility patterns of CAMP4 THERAPEUTICS and Optical Cable.

Diversification Opportunities for CAMP4 THERAPEUTICS and Optical Cable

-0.51

Correlation Coefficient

CAMP4 THERAPEUTICS  Optical Cable

Excellent diversification

The 3 months correlation between CAMP4 and Optical is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding CAMP4 THERAPEUTICS PORATION and Optical Cable in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Optical Cable and CAMP4 THERAPEUTICS 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 CAMP4 THERAPEUTICS PORATION are associated (or correlated) with Optical Cable. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Optical Cable has no effect on the direction of CAMP4 THERAPEUTICS i.e., CAMP4 THERAPEUTICS and Optical Cable go up and down completely randomly.

Pair Corralation between CAMP4 THERAPEUTICS and Optical Cable

Given the investment horizon of 90 days CAMP4 THERAPEUTICS PORATION is expected to generate 3.08 times more return on investment than Optical Cable. However, CAMP4 THERAPEUTICS is 3.08 times more volatile than Optical Cable. It trades about 0.06 of its potential returns per unit of risk. Optical Cable is currently generating about -0.25 per unit of risk. If you would invest  481.00  in CAMP4 THERAPEUTICS PORATION on December 2, 2024 and sell it today you would earn a total of  10.00  from holding CAMP4 THERAPEUTICS PORATION or generate 2.08% return on investment over 90 days.

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

CAMP4 THERAPEUTICS PORATION  vs.  Optical Cable

CAMP4 THERAPEUTICS

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in CAMP4 THERAPEUTICS PORATION are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Even with relatively inconsistent primary indicators, CAMP4 THERAPEUTICS reported solid returns over the last few months and may actually be approaching a breakup point.

Optical Cable

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Optical Cable are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of rather inconsistent fundamental indicators, Optical Cable exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with CAMP4 THERAPEUTICS and Optical Cable

The main advantage of trading using opposite CAMP4 THERAPEUTICS and Optical Cable positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CAMP4 THERAPEUTICS position performs unexpectedly, Optical Cable 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 Optical Cable will offset losses from the drop in Optical Cable's long position.

The idea behind CAMP4 THERAPEUTICS PORATION and Optical Cable 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.