Correlation Between CERo Therapeutics and Wirecard

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

Diversification Opportunities for CERo Therapeutics and Wirecard

0.24

Correlation Coefficient

CERo Therapeutics  Wirecard

Modest diversification

The 3 months correlation between CERo and Wirecard is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding CERo Therapeutics Holdings and Wirecard AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wirecard 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 Wirecard. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wirecard AG has no effect on the direction of CERo Therapeutics i.e., CERo Therapeutics and Wirecard go up and down completely randomly.

Pair Corralation between CERo Therapeutics and Wirecard

Assuming the 90 days horizon CERo Therapeutics is expected to generate 5.79 times less return on investment than Wirecard. But when comparing it to its historical volatility, CERo Therapeutics Holdings is 5.64 times less risky than Wirecard. It trades about 0.11 of its potential returns per unit of risk. Wirecard AG is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  1.00  in Wirecard AG on December 11, 2024 and sell it today you would earn a total of  0.00  from holding Wirecard AG or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	93.55%
Values	Daily Returns

CERo Therapeutics Holdings  vs.  Wirecard AG

CERo Therapeutics

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in CERo Therapeutics Holdings are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unsteady basic indicators, CERo Therapeutics showed solid returns over the last few months and may actually be approaching a breakup point.

Wirecard AG

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Wirecard AG are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak fundamental indicators, Wirecard reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with CERo Therapeutics and Wirecard

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

The idea behind CERo Therapeutics Holdings and Wirecard 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.

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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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.