Correlation Between Fortress Biotech and CareCloud

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

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

Diversification Opportunities for Fortress Biotech and CareCloud

0.14

Correlation Coefficient

Fortress Biotech  CareCloud

Average diversification

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

Pair Corralation between Fortress Biotech and CareCloud

Assuming the 90 days horizon Fortress Biotech Pref is expected to generate 0.4 times more return on investment than CareCloud. However, Fortress Biotech Pref is 2.5 times less risky than CareCloud. It trades about -0.02 of its potential returns per unit of risk. CareCloud is currently generating about -0.19 per unit of risk. If you would invest  675.00  in Fortress Biotech Pref on December 28, 2024 and sell it today you would lose (37.00) from holding Fortress Biotech Pref or give up 5.48% of portfolio value over 90 days.

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

Fortress Biotech Pref  vs.  CareCloud

Fortress Biotech Pref

Risk-Adjusted Performance

Very Weak

Over the last 90 days Fortress Biotech Pref has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, Fortress Biotech is not utilizing all of its potentials. The current stock price agitation, may contribute to short-term losses for the retail investors.

CareCloud

Risk-Adjusted Performance

Very Weak

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

Pair Trading with Fortress Biotech and CareCloud

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

The idea behind Fortress Biotech Pref and CareCloud 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.