Correlation Between Cognition Therapeutics and Eyenovia

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

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

Diversification Opportunities for Cognition Therapeutics and Eyenovia

-0.16

Correlation Coefficient

Cognition Therapeutics  Eyenovia

Good diversification

The 3 months correlation between Cognition and Eyenovia is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding Cognition Therapeutics and Eyenovia in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eyenovia and Cognition 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 Cognition Therapeutics are associated (or correlated) with Eyenovia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eyenovia has no effect on the direction of Cognition Therapeutics i.e., Cognition Therapeutics and Eyenovia go up and down completely randomly.

Pair Corralation between Cognition Therapeutics and Eyenovia

Given the investment horizon of 90 days Cognition Therapeutics is expected to generate 0.73 times more return on investment than Eyenovia. However, Cognition Therapeutics is 1.36 times less risky than Eyenovia. It trades about 0.34 of its potential returns per unit of risk. Eyenovia is currently generating about 0.24 per unit of risk. If you would invest  46.00  in Cognition Therapeutics on October 10, 2024 and sell it today you would earn a total of  36.00  from holding Cognition Therapeutics or generate 78.26% return on investment over 90 days.

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

Cognition Therapeutics  vs.  Eyenovia

Cognition Therapeutics

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Cognition Therapeutics are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Cognition Therapeutics showed solid returns over the last few months and may actually be approaching a breakup point.

Eyenovia

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Eyenovia has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's technical and fundamental indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Pair Trading with Cognition Therapeutics and Eyenovia

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

The idea behind Cognition Therapeutics and Eyenovia 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 Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.