Correlation Between Capricor Therapeutics and Annexon

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

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

Diversification Opportunities for Capricor Therapeutics and Annexon

0.17

Correlation Coefficient

Capricor Therapeutics  Annexon

Average diversification

The 3 months correlation between Capricor and Annexon is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding Capricor Therapeutics and Annexon in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Annexon and Capricor 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 Capricor Therapeutics are associated (or correlated) with Annexon. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Annexon has no effect on the direction of Capricor Therapeutics i.e., Capricor Therapeutics and Annexon go up and down completely randomly.

Pair Corralation between Capricor Therapeutics and Annexon

Given the investment horizon of 90 days Capricor Therapeutics is expected to generate 1.1 times more return on investment than Annexon. However, Capricor Therapeutics is 1.1 times more volatile than Annexon. It trades about -0.03 of its potential returns per unit of risk. Annexon is currently generating about -0.25 per unit of risk. If you would invest  1,376  in Capricor Therapeutics on December 29, 2024 and sell it today you would lose (226.00) from holding Capricor Therapeutics or give up 16.42% of portfolio value over 90 days.

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

Capricor Therapeutics  vs.  Annexon

Capricor Therapeutics

Risk-Adjusted Performance

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 latest inconsistent performance, the Stock's basic indicators remain invariable and the latest agitation on Wall Street may also be a sign of long-running gains for the enterprise retail investors.

Annexon

Risk-Adjusted Performance

Very Weak

Over the last 90 days Annexon has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Capricor Therapeutics and Annexon

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

The idea behind Capricor Therapeutics and Annexon 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.