Correlation Between Capricor Therapeutics and ATAI Life

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

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

Diversification Opportunities for Capricor Therapeutics and ATAI Life

0.27

Correlation Coefficient

Capricor Therapeutics  ATAI Life

Modest diversification

The 3 months correlation between Capricor and ATAI is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding Capricor Therapeutics and ATAI Life Sciences in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ATAI Life Sciences 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 ATAI Life. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ATAI Life Sciences has no effect on the direction of Capricor Therapeutics i.e., Capricor Therapeutics and ATAI Life go up and down completely randomly.

Pair Corralation between Capricor Therapeutics and ATAI Life

Given the investment horizon of 90 days Capricor Therapeutics is expected to generate 1.1 times more return on investment than ATAI Life. However, Capricor Therapeutics is 1.1 times more volatile than ATAI Life Sciences. It trades about 0.07 of its potential returns per unit of risk. ATAI Life Sciences is currently generating about 0.04 per unit of risk. If you would invest  464.00  in Capricor Therapeutics on December 3, 2024 and sell it today you would earn a total of  976.00  from holding Capricor Therapeutics or generate 210.34% return on investment over 90 days.

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

Capricor Therapeutics  vs.  ATAI Life Sciences

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 relatively invariable basic indicators, Capricor Therapeutics is not utilizing all of its potentials. The recent stock price agitation, may contribute to short-term losses for the retail investors.

ATAI Life Sciences

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in ATAI Life Sciences are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite fairly unsteady basic indicators, ATAI Life demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Capricor Therapeutics and ATAI Life

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

The idea behind Capricor Therapeutics and ATAI Life Sciences 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..