Correlation Between Cogent Biosciences and Cytokinetics

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

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

Diversification Opportunities for Cogent Biosciences and Cytokinetics

0.48

Correlation Coefficient

Cogent Biosciences  Cytokinetics

Very weak diversification

The 3 months correlation between Cogent and Cytokinetics is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding Cogent Biosciences and Cytokinetics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cytokinetics and Cogent Biosciences 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 Cogent Biosciences are associated (or correlated) with Cytokinetics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cytokinetics has no effect on the direction of Cogent Biosciences i.e., Cogent Biosciences and Cytokinetics go up and down completely randomly.

Pair Corralation between Cogent Biosciences and Cytokinetics

Given the investment horizon of 90 days Cogent Biosciences is expected to under-perform the Cytokinetics. In addition to that, Cogent Biosciences is 1.15 times more volatile than Cytokinetics. It trades about -0.12 of its total potential returns per unit of risk. Cytokinetics is currently generating about -0.04 per unit of volatility. If you would invest  5,186  in Cytokinetics on November 28, 2024 and sell it today you would lose (521.00) from holding Cytokinetics or give up 10.05% of portfolio value over 90 days.

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

Cogent Biosciences  vs.  Cytokinetics

Cogent Biosciences

Risk-Adjusted Performance

Very Weak

Over the last 90 days Cogent Biosciences has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's technical and fundamental indicators remain comparatively stable which may send shares a bit higher in March 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Cytokinetics

Risk-Adjusted Performance

Very Weak

Over the last 90 days Cytokinetics has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest unsteady performance, the Stock's basic indicators remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.

Pair Trading with Cogent Biosciences and Cytokinetics

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

The idea behind Cogent Biosciences and Cytokinetics 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.