Correlation Between Cingulate and Benitec Biopharma

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

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

Diversification Opportunities for Cingulate and Benitec Biopharma

-0.59

Correlation Coefficient

Cingulate  Benitec Biopharma

Excellent diversification

The 3 months correlation between Cingulate and Benitec is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding Cingulate and Benitec Biopharma Ltd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Benitec Biopharma and Cingulate 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 Cingulate are associated (or correlated) with Benitec Biopharma. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Benitec Biopharma has no effect on the direction of Cingulate i.e., Cingulate and Benitec Biopharma go up and down completely randomly.

Pair Corralation between Cingulate and Benitec Biopharma

Given the investment horizon of 90 days Cingulate is expected to under-perform the Benitec Biopharma. But the stock apears to be less risky and, when comparing its historical volatility, Cingulate is 1.3 times less risky than Benitec Biopharma. The stock trades about -0.04 of its potential returns per unit of risk. The Benitec Biopharma Ltd is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  1,251  in Benitec Biopharma Ltd on December 29, 2024 and sell it today you would earn a total of  92.00  from holding Benitec Biopharma Ltd or generate 7.35% return on investment over 90 days.

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

Cingulate  vs.  Benitec Biopharma Ltd

Cingulate

Risk-Adjusted Performance

Very Weak

Over the last 90 days Cingulate has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Benitec Biopharma

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Benitec Biopharma Ltd are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of rather inconsistent basic indicators, Benitec Biopharma exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Cingulate and Benitec Biopharma

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

The idea behind Cingulate and Benitec Biopharma Ltd 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.