Correlation Between Dermata Therapeutics and CXApp

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

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

Diversification Opportunities for Dermata Therapeutics and CXApp

0.14

Correlation Coefficient

Dermata Therapeutics  CXApp

Average diversification

The 3 months correlation between Dermata and CXApp is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding Dermata Therapeutics and CXApp Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CXApp Inc and Dermata Therapeutics 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 Dermata Therapeutics are associated (or correlated) with CXApp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CXApp Inc has no effect on the direction of Dermata Therapeutics i.e., Dermata Therapeutics and CXApp go up and down completely randomly.

Pair Corralation between Dermata Therapeutics and CXApp

Given the investment horizon of 90 days Dermata Therapeutics is expected to under-perform the CXApp. But the stock apears to be less risky and, when comparing its historical volatility, Dermata Therapeutics is 2.21 times less risky than CXApp. The stock trades about -0.05 of its potential returns per unit of risk. The CXApp Inc is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  1,011  in CXApp Inc on September 28, 2024 and sell it today you would lose (804.00) from holding CXApp Inc or give up 79.53% of portfolio value over 90 days.

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

Dermata Therapeutics  vs.  CXApp Inc

Dermata Therapeutics

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Dermata Therapeutics has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest unsteady performance, the Stock's primary indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

CXApp Inc

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in CXApp Inc are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite fairly fragile basic indicators, CXApp demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Dermata Therapeutics and CXApp

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

The idea behind Dermata Therapeutics and CXApp Inc 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.