Correlation Between Cintas and Conduit Pharmaceuticals

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

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

Diversification Opportunities for Cintas and Conduit Pharmaceuticals

0.63

Correlation Coefficient

Cintas  Conduit Pharmaceuticals

Poor diversification

The 3 months correlation between Cintas and Conduit is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Cintas and Conduit Pharmaceuticals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Conduit Pharmaceuticals and Cintas 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 Cintas are associated (or correlated) with Conduit Pharmaceuticals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Conduit Pharmaceuticals has no effect on the direction of Cintas i.e., Cintas and Conduit Pharmaceuticals go up and down completely randomly.

Pair Corralation between Cintas and Conduit Pharmaceuticals

Given the investment horizon of 90 days Cintas is expected to under-perform the Conduit Pharmaceuticals. But the stock apears to be less risky and, when comparing its historical volatility, Cintas is 4.97 times less risky than Conduit Pharmaceuticals. The stock trades about -0.14 of its potential returns per unit of risk. The Conduit Pharmaceuticals is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  9.40  in Conduit Pharmaceuticals on October 11, 2024 and sell it today you would lose (1.20) from holding Conduit Pharmaceuticals or give up 12.77% of portfolio value over 90 days.

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

Cintas  vs.  Conduit Pharmaceuticals

Cintas

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Cintas has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unfluctuating performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Conduit Pharmaceuticals

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Conduit Pharmaceuticals has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unfluctuating performance, the Stock's fundamental indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with Cintas and Conduit Pharmaceuticals

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

The idea behind Cintas and Conduit Pharmaceuticals 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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.