Correlation Between Cumberland Pharmaceuticals and Quantum BioPharma

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Can any of the company-specific risk be diversified away by investing in both Cumberland Pharmaceuticals and Quantum 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 Cumberland Pharmaceuticals and Quantum BioPharma into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cumberland Pharmaceuticals and Quantum BioPharma, you can compare the effects of market volatilities on Cumberland Pharmaceuticals and Quantum 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 Cumberland Pharmaceuticals with a short position of Quantum BioPharma. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cumberland Pharmaceuticals and Quantum BioPharma.

Diversification Opportunities for Cumberland Pharmaceuticals and Quantum BioPharma

-0.62
  Correlation Coefficient

Excellent diversification

The 3 months correlation between Cumberland and Quantum is -0.62. Overlapping area represents the amount of risk that can be diversified away by holding Cumberland Pharmaceuticals and Quantum BioPharma in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Quantum BioPharma 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 Quantum BioPharma. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Quantum BioPharma has no effect on the direction of Cumberland Pharmaceuticals i.e., Cumberland Pharmaceuticals and Quantum BioPharma go up and down completely randomly.

Pair Corralation between Cumberland Pharmaceuticals and Quantum BioPharma

Given the investment horizon of 90 days Cumberland Pharmaceuticals is expected to generate 0.69 times more return on investment than Quantum BioPharma. However, Cumberland Pharmaceuticals is 1.46 times less risky than Quantum BioPharma. It trades about 0.06 of its potential returns per unit of risk. Quantum BioPharma is currently generating about -0.04 per unit of risk. If you would invest  159.00  in Cumberland Pharmaceuticals on October 9, 2024 and sell it today you would earn a total of  70.00  from holding Cumberland Pharmaceuticals or generate 44.03% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthWeak
Accuracy100.0%
ValuesDaily Returns

Cumberland Pharmaceuticals  vs.  Quantum BioPharma

 Performance 
       Timeline  
Cumberland Pharmaceuticals 

Risk-Adjusted Performance

9 of 100

 
Weak
 
Strong
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.
Quantum BioPharma 

Risk-Adjusted Performance

1 of 100

 
Weak
 
Strong
Weak
Compared to the overall equity markets, risk-adjusted returns on investments in Quantum BioPharma are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of very weak basic indicators, Quantum BioPharma may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Cumberland Pharmaceuticals and Quantum BioPharma Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Cumberland Pharmaceuticals and Quantum BioPharma

The main advantage of trading using opposite Cumberland Pharmaceuticals and Quantum BioPharma positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cumberland Pharmaceuticals position performs unexpectedly, Quantum 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 Quantum BioPharma will offset losses from the drop in Quantum BioPharma's long position.
The idea behind Cumberland Pharmaceuticals and Quantum BioPharma 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..

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