Correlation Between Cyclacel Pharmaceuticals and Sirona Biochem

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

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

Diversification Opportunities for Cyclacel Pharmaceuticals and Sirona Biochem

0.4

Correlation Coefficient

Cyclacel Pharmaceuticals  Sirona Biochem

Very weak diversification

The 3 months correlation between Cyclacel and Sirona is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding Cyclacel Pharmaceuticals and Sirona Biochem Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sirona Biochem Corp and Cyclacel 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 Cyclacel Pharmaceuticals are associated (or correlated) with Sirona Biochem. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sirona Biochem Corp has no effect on the direction of Cyclacel Pharmaceuticals i.e., Cyclacel Pharmaceuticals and Sirona Biochem go up and down completely randomly.

Pair Corralation between Cyclacel Pharmaceuticals and Sirona Biochem

Given the investment horizon of 90 days Cyclacel Pharmaceuticals is expected to generate 1.2 times more return on investment than Sirona Biochem. However, Cyclacel Pharmaceuticals is 1.2 times more volatile than Sirona Biochem Corp. It trades about 0.13 of its potential returns per unit of risk. Sirona Biochem Corp is currently generating about -0.08 per unit of risk. If you would invest  39.00  in Cyclacel Pharmaceuticals on October 9, 2024 and sell it today you would earn a total of  6.00  from holding Cyclacel Pharmaceuticals or generate 15.38% return on investment over 90 days.

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

Cyclacel Pharmaceuticals  vs.  Sirona Biochem Corp

Cyclacel Pharmaceuticals

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Cyclacel Pharmaceuticals has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's fundamental indicators remain rather sound which may send shares a bit higher in February 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Sirona Biochem Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sirona Biochem Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's fundamental indicators remain nearly stable which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Cyclacel Pharmaceuticals and Sirona Biochem

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

The idea behind Cyclacel Pharmaceuticals and Sirona Biochem Corp 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.