Correlation Between Cyclacel Pharmaceuticals and Encision

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

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

Diversification Opportunities for Cyclacel Pharmaceuticals and Encision

-0.37

Correlation Coefficient

Cyclacel Pharmaceuticals  Encision

Very good diversification

The 3 months correlation between Cyclacel and Encision is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding Cyclacel Pharmaceuticals and Encision in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Encision 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 Encision. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Encision has no effect on the direction of Cyclacel Pharmaceuticals i.e., Cyclacel Pharmaceuticals and Encision go up and down completely randomly.

Pair Corralation between Cyclacel Pharmaceuticals and Encision

Assuming the 90 days horizon Cyclacel Pharmaceuticals is expected to generate 2.14 times more return on investment than Encision. However, Cyclacel Pharmaceuticals is 2.14 times more volatile than Encision. It trades about 0.02 of its potential returns per unit of risk. Encision is currently generating about -0.01 per unit of risk. If you would invest  930.00  in Cyclacel Pharmaceuticals on September 29, 2024 and sell it today you would lose (283.00) from holding Cyclacel Pharmaceuticals or give up 30.43% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	27.38%
Values	Daily Returns

Cyclacel Pharmaceuticals  vs.  Encision

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. Even with relatively invariable fundamental indicators, Cyclacel Pharmaceuticals is not utilizing all of its potentials. The recent stock price agitation, may contribute to short-term losses for the retail investors.

Encision

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Encision has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong forward indicators, Encision is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Cyclacel Pharmaceuticals and Encision

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

The idea behind Cyclacel Pharmaceuticals and Encision 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.