Correlation Between Cumberland Pharmaceuticals and CureVac NV

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

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

Diversification Opportunities for Cumberland Pharmaceuticals and CureVac NV

0.39

Correlation Coefficient

Cumberland Pharmaceuticals  CureVac NV

Weak diversification

The 3 months correlation between Cumberland and CureVac is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding Cumberland Pharmaceuticals and CureVac NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CureVac NV and Cumberland Pharmaceuticals 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 Cumberland Pharmaceuticals are associated (or correlated) with CureVac NV. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CureVac NV has no effect on the direction of Cumberland Pharmaceuticals i.e., Cumberland Pharmaceuticals and CureVac NV go up and down completely randomly.

Pair Corralation between Cumberland Pharmaceuticals and CureVac NV

Given the investment horizon of 90 days Cumberland Pharmaceuticals is expected to generate 4.01 times more return on investment than CureVac NV. However, Cumberland Pharmaceuticals is 4.01 times more volatile than CureVac NV. It trades about 0.12 of its potential returns per unit of risk. CureVac NV is currently generating about 0.03 per unit of risk. If you would invest  130.00  in Cumberland Pharmaceuticals on September 12, 2024 and sell it today you would earn a total of  114.00  from holding Cumberland Pharmaceuticals or generate 87.69% return on investment over 90 days.

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

Cumberland Pharmaceuticals  vs.  CureVac NV

Cumberland Pharmaceuticals

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Cumberland Pharmaceuticals are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak forward indicators, Cumberland Pharmaceuticals showed solid returns over the last few months and may actually be approaching a breakup point.

CureVac NV

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in CureVac NV are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak basic indicators, CureVac NV may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Cumberland Pharmaceuticals and CureVac NV

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

The idea behind Cumberland Pharmaceuticals and CureVac NV 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.