Correlation Between CERo Therapeutics and Telix Pharmaceuticals

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

Diversification Opportunities for CERo Therapeutics and Telix Pharmaceuticals

-0.66

Correlation Coefficient

CERo Therapeutics  Telix Pharmaceuticals

Excellent diversification

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

Pair Corralation between CERo Therapeutics and Telix Pharmaceuticals

Assuming the 90 days horizon CERo Therapeutics Holdings is expected to generate 5.5 times more return on investment than Telix Pharmaceuticals. However, CERo Therapeutics is 5.5 times more volatile than Telix Pharmaceuticals Limited. It trades about 0.18 of its potential returns per unit of risk. Telix Pharmaceuticals Limited is currently generating about 0.06 per unit of risk. If you would invest  1.05  in CERo Therapeutics Holdings on October 20, 2024 and sell it today you would earn a total of  0.49  from holding CERo Therapeutics Holdings or generate 46.67% 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.  Telix Pharmaceuticals Limited

CERo Therapeutics

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in CERo Therapeutics Holdings are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of fairly inconsistent basic indicators, CERo Therapeutics showed solid returns over the last few months and may actually be approaching a breakup point.

Telix Pharmaceuticals

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Telix Pharmaceuticals Limited are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unfluctuating essential indicators, Telix Pharmaceuticals showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with CERo Therapeutics and Telix Pharmaceuticals

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

The idea behind CERo Therapeutics Holdings and Telix Pharmaceuticals Limited 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.