Correlation Between Capricor Therapeutics and GH Research

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

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

Diversification Opportunities for Capricor Therapeutics and GH Research

0.13

Correlation Coefficient

Capricor Therapeutics  GH Research

Average diversification

The 3 months correlation between Capricor and GHRS is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding Capricor Therapeutics and GH Research PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GH Research PLC 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 GH Research. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GH Research PLC has no effect on the direction of Capricor Therapeutics i.e., Capricor Therapeutics and GH Research go up and down completely randomly.

Pair Corralation between Capricor Therapeutics and GH Research

Given the investment horizon of 90 days Capricor Therapeutics is expected to under-perform the GH Research. But the stock apears to be less risky and, when comparing its historical volatility, Capricor Therapeutics is 1.91 times less risky than GH Research. The stock trades about -0.01 of its potential returns per unit of risk. The GH Research PLC is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  841.00  in GH Research PLC on December 3, 2024 and sell it today you would earn a total of  172.00  from holding GH Research PLC or generate 20.45% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.36%
Values	Daily Returns

Capricor Therapeutics  vs.  GH Research PLC

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.

GH Research PLC

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in GH Research PLC are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unfluctuating basic indicators, GH Research unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Capricor Therapeutics and GH Research

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

The idea behind Capricor Therapeutics and GH Research PLC 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.