Correlation Between Capricor Therapeutics and I Mab

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

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

Diversification Opportunities for Capricor Therapeutics and I Mab

0.53

Correlation Coefficient

Capricor Therapeutics  I Mab

Very weak diversification

The 3 months correlation between Capricor and IMAB is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding Capricor Therapeutics and I Mab in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on I Mab 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 I Mab. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of I Mab has no effect on the direction of Capricor Therapeutics i.e., Capricor Therapeutics and I Mab go up and down completely randomly.

Pair Corralation between Capricor Therapeutics and I Mab

Given the investment horizon of 90 days Capricor Therapeutics is expected to under-perform the I Mab. But the stock apears to be less risky and, when comparing its historical volatility, Capricor Therapeutics is 1.66 times less risky than I Mab. The stock trades about -0.03 of its potential returns per unit of risk. The I Mab is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest  97.00  in I Mab on October 22, 2024 and sell it today you would earn a total of  10.00  from holding I Mab or generate 10.31% return on investment over 90 days.

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

Capricor Therapeutics  vs.  I Mab

Capricor Therapeutics

Risk-Adjusted Performance

0 of 100

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 inconsistent performance in the last few months, the Stock's basic indicators remain relatively invariable which may send shares a bit higher in February 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

I Mab

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Capricor Therapeutics and I Mab

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

The idea behind Capricor Therapeutics and I Mab 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.