Correlation Between CERo Therapeutics and Community Financial

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

Diversification Opportunities for CERo Therapeutics and Community Financial

-0.42

Correlation Coefficient

CERo Therapeutics  Community Financial

Very good diversification

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

Pair Corralation between CERo Therapeutics and Community Financial

If you would invest  0.51  in CERo Therapeutics Holdings on September 30, 2024 and sell it today you would earn a total of  0.39  from holding CERo Therapeutics Holdings or generate 76.47% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	1.72%
Values	Daily Returns

CERo Therapeutics Holdings  vs.  Community Financial Corp

CERo Therapeutics

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in CERo Therapeutics Holdings are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, CERo Therapeutics showed solid returns over the last few months and may actually be approaching a breakup point.

Community Financial Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Community Financial Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, Community Financial is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with CERo Therapeutics and Community Financial

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

The idea behind CERo Therapeutics Holdings and Community Financial Corp 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.