Correlation Between Caribou Biosciences and Humacyte

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

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

Diversification Opportunities for Caribou Biosciences and Humacyte

-0.01

Correlation Coefficient

Caribou Biosciences  Humacyte

Good diversification

The 3 months correlation between Caribou and Humacyte is -0.01. Overlapping area represents the amount of risk that can be diversified away by holding Caribou Biosciences and Humacyte in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Humacyte and Caribou 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 Caribou Biosciences are associated (or correlated) with Humacyte. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Humacyte has no effect on the direction of Caribou Biosciences i.e., Caribou Biosciences and Humacyte go up and down completely randomly.

Pair Corralation between Caribou Biosciences and Humacyte

Given the investment horizon of 90 days Caribou Biosciences is expected to under-perform the Humacyte. But the stock apears to be less risky and, when comparing its historical volatility, Caribou Biosciences is 1.75 times less risky than Humacyte. The stock trades about -0.09 of its potential returns per unit of risk. The Humacyte is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  51.00  in Humacyte on October 2, 2024 and sell it today you would earn a total of  131.00  from holding Humacyte or generate 256.86% return on investment over 90 days.

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

Caribou Biosciences  vs.  Humacyte

Caribou Biosciences

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Caribou Biosciences has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable fundamental drivers, Caribou Biosciences is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Humacyte

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Humacyte are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Humacyte showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Caribou Biosciences and Humacyte

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

The idea behind Caribou Biosciences and Humacyte 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.