Correlation Between Capricor Therapeutics and Crinetics Pharmaceuticals

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

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

Diversification Opportunities for Capricor Therapeutics and Crinetics Pharmaceuticals

0.66

Correlation Coefficient

Capricor Therapeutics  Crinetics Pharmaceuticals

Poor diversification

The 3 months correlation between Capricor and Crinetics is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Capricor Therapeutics and Crinetics Pharmaceuticals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Crinetics Pharmaceuticals 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 Crinetics Pharmaceuticals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Crinetics Pharmaceuticals has no effect on the direction of Capricor Therapeutics i.e., Capricor Therapeutics and Crinetics Pharmaceuticals go up and down completely randomly.

Pair Corralation between Capricor Therapeutics and Crinetics Pharmaceuticals

Given the investment horizon of 90 days Capricor Therapeutics is expected to generate 4.75 times more return on investment than Crinetics Pharmaceuticals. However, Capricor Therapeutics is 4.75 times more volatile than Crinetics Pharmaceuticals. It trades about 0.25 of its potential returns per unit of risk. Crinetics Pharmaceuticals is currently generating about 0.08 per unit of risk. If you would invest  437.00  in Capricor Therapeutics on September 3, 2024 and sell it today you would earn a total of  1,464  from holding Capricor Therapeutics or generate 335.01% return on investment over 90 days.

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

Capricor Therapeutics  vs.  Crinetics Pharmaceuticals

Capricor Therapeutics

Risk-Adjusted Performance

19 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Capricor Therapeutics are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. Even with relatively inconsistent basic indicators, Capricor Therapeutics reported solid returns over the last few months and may actually be approaching a breakup point.

Crinetics Pharmaceuticals

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Crinetics Pharmaceuticals are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unsteady basic indicators, Crinetics Pharmaceuticals may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Capricor Therapeutics and Crinetics Pharmaceuticals

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

The idea behind Capricor Therapeutics and Crinetics Pharmaceuticals 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.