Correlation Between Capricor Therapeutics and Ocular Therapeutix

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

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

Diversification Opportunities for Capricor Therapeutics and Ocular Therapeutix

-0.11

Correlation Coefficient

Capricor Therapeutics  Ocular Therapeutix

Good diversification

The 3 months correlation between Capricor and Ocular is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding Capricor Therapeutics and Ocular Therapeutix in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ocular Therapeutix 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 Ocular Therapeutix. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ocular Therapeutix has no effect on the direction of Capricor Therapeutics i.e., Capricor Therapeutics and Ocular Therapeutix go up and down completely randomly.

Pair Corralation between Capricor Therapeutics and Ocular Therapeutix

Given the investment horizon of 90 days Capricor Therapeutics is expected to generate 1.25 times more return on investment than Ocular Therapeutix. However, Capricor Therapeutics is 1.25 times more volatile than Ocular Therapeutix. It trades about 0.03 of its potential returns per unit of risk. Ocular Therapeutix is currently generating about -0.04 per unit of risk. If you would invest  1,413  in Capricor Therapeutics on December 21, 2024 and sell it today you would earn a total of  23.00  from holding Capricor Therapeutics or generate 1.63% return on investment over 90 days.

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

Capricor Therapeutics  vs.  Ocular Therapeutix

Capricor Therapeutics

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Capricor Therapeutics are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Even with relatively inconsistent basic indicators, Capricor Therapeutics may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Ocular Therapeutix

Risk-Adjusted Performance

Very Weak

Over the last 90 days Ocular Therapeutix has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.

Pair Trading with Capricor Therapeutics and Ocular Therapeutix

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

The idea behind Capricor Therapeutics and Ocular Therapeutix 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.