Correlation Between Equillium and Cardio Diagnostics

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

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

Diversification Opportunities for Equillium and Cardio Diagnostics

-0.51

Correlation Coefficient

Equillium  Cardio Diagnostics

Excellent diversification

The 3 months correlation between Equillium and Cardio is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding Equillium and Cardio Diagnostics Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cardio Diagnostics and Equillium 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 Equillium are associated (or correlated) with Cardio Diagnostics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cardio Diagnostics has no effect on the direction of Equillium i.e., Equillium and Cardio Diagnostics go up and down completely randomly.

Pair Corralation between Equillium and Cardio Diagnostics

Allowing for the 90-day total investment horizon Equillium is expected to generate 23.02 times less return on investment than Cardio Diagnostics. But when comparing it to its historical volatility, Equillium is 4.44 times less risky than Cardio Diagnostics. It trades about 0.06 of its potential returns per unit of risk. Cardio Diagnostics Holdings is currently generating about 0.32 of returns per unit of risk over similar time horizon. If you would invest  30.00  in Cardio Diagnostics Holdings on October 4, 2024 and sell it today you would earn a total of  55.00  from holding Cardio Diagnostics Holdings or generate 183.33% return on investment over 90 days.

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

Equillium  vs.  Cardio Diagnostics Holdings

Equillium

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Equillium are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Equillium may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Cardio Diagnostics

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Cardio Diagnostics Holdings are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of very weak forward indicators, Cardio Diagnostics displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Equillium and Cardio Diagnostics

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

The idea behind Equillium and Cardio Diagnostics Holdings 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.