Correlation Between CERo Therapeutics and Ams AG

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

By analyzing existing cross correlation between CERo Therapeutics Holdings and ams AG, you can compare the effects of market volatilities on CERo Therapeutics and Ams AG 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 CERo Therapeutics with a short position of Ams AG. Check out your portfolio center. Please also check ongoing floating volatility patterns of CERo Therapeutics and Ams AG.

Diversification Opportunities for CERo Therapeutics and Ams AG

-0.66

Correlation Coefficient

CERo Therapeutics  Ams AG

Excellent diversification

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

Pair Corralation between CERo Therapeutics and Ams AG

Assuming the 90 days horizon CERo Therapeutics Holdings is expected to under-perform the Ams AG. In addition to that, CERo Therapeutics is 2.27 times more volatile than ams AG. It trades about -0.02 of its total potential returns per unit of risk. ams AG is currently generating about 0.08 per unit of volatility. If you would invest  336.00  in ams AG on September 23, 2024 and sell it today you would earn a total of  22.00  from holding ams AG or generate 6.55% return on investment over 90 days.

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

CERo Therapeutics Holdings  vs.  ams AG

CERo Therapeutics

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in CERo Therapeutics Holdings are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of fairly uncertain basic indicators, CERo Therapeutics showed solid returns over the last few months and may actually be approaching a breakup point.

ams AG

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with CERo Therapeutics and Ams AG

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

The idea behind CERo Therapeutics Holdings and ams AG 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 Transaction History module to view history of all your transactions and understand their impact on performance.