Correlation Between CERo Therapeutics and Climb Bio

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Can any of the company-specific risk be diversified away by investing in both CERo Therapeutics and Climb Bio 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 Climb Bio 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 Climb Bio, you can compare the effects of market volatilities on CERo Therapeutics and Climb Bio 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 Climb Bio. Check out your portfolio center. Please also check ongoing floating volatility patterns of CERo Therapeutics and Climb Bio.

Diversification Opportunities for CERo Therapeutics and Climb Bio

CERoClimbDiversified AwayCERoClimbDiversified Away100%
-0.42
  Correlation Coefficient

Very good diversification

The 3 months correlation between CERo and Climb is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding CERo Therapeutics Holdings and Climb Bio in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Climb Bio 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 Climb Bio. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Climb Bio has no effect on the direction of CERo Therapeutics i.e., CERo Therapeutics and Climb Bio go up and down completely randomly.

Pair Corralation between CERo Therapeutics and Climb Bio

Assuming the 90 days horizon CERo Therapeutics Holdings is expected to generate 6.11 times more return on investment than Climb Bio. However, CERo Therapeutics is 6.11 times more volatile than Climb Bio. It trades about 0.2 of its potential returns per unit of risk. Climb Bio is currently generating about -0.23 per unit of risk. If you would invest  0.60  in CERo Therapeutics Holdings on October 10, 2024 and sell it today you would earn a total of  1.37  from holding CERo Therapeutics Holdings or generate 228.33% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthVery Weak
Accuracy95.08%
ValuesDaily Returns

CERo Therapeutics Holdings  vs.  Climb Bio

 Performance 
JavaScript chart by amCharts 3.21.15OctNovDec -50050100
JavaScript chart by amCharts 3.21.15CEROW CLYM
       Timeline  
CERo Therapeutics 

Risk-Adjusted Performance

15 of 100

 
Weak
 
Strong
Good
Compared to the overall equity markets, risk-adjusted returns on investments in CERo Therapeutics Holdings are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unfluctuating basic indicators, CERo Therapeutics showed solid returns over the last few months and may actually be approaching a breakup point.
JavaScript chart by amCharts 3.21.15NovDecJanDecJan0.0050.010.0150.020.025
Climb Bio 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Climb Bio has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in February 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.
JavaScript chart by amCharts 3.21.15NovDecJanDecJan22.533.544.555.5

CERo Therapeutics and Climb Bio Volatility Contrast

   Predicted Return Density   
JavaScript chart by amCharts 3.21.15-105.86-79.28-52.71-26.13-0.4427.6356.284.78113.36141.94 0.0020.0040.0060.0080.0100.0120.014
JavaScript chart by amCharts 3.21.15CEROW CLYM
       Returns  

Pair Trading with CERo Therapeutics and Climb Bio

The main advantage of trading using opposite CERo Therapeutics and Climb Bio positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CERo Therapeutics position performs unexpectedly, Climb Bio 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 Climb Bio will offset losses from the drop in Climb Bio's long position.
The idea behind CERo Therapeutics Holdings and Climb Bio 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.

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