Correlation Between Fortrea Holdings and Cyclacel Pharmaceuticals

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

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

Diversification Opportunities for Fortrea Holdings and Cyclacel Pharmaceuticals

-0.38

Correlation Coefficient

Fortrea Holdings  Cyclacel Pharmaceuticals

Very good diversification

The 3 months correlation between Fortrea and Cyclacel is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding Fortrea Holdings and Cyclacel Pharmaceuticals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cyclacel Pharmaceuticals and Fortrea Holdings 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 Fortrea Holdings are associated (or correlated) with Cyclacel Pharmaceuticals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cyclacel Pharmaceuticals has no effect on the direction of Fortrea Holdings i.e., Fortrea Holdings and Cyclacel Pharmaceuticals go up and down completely randomly.

Pair Corralation between Fortrea Holdings and Cyclacel Pharmaceuticals

Given the investment horizon of 90 days Fortrea Holdings is expected to generate 9.37 times less return on investment than Cyclacel Pharmaceuticals. But when comparing it to its historical volatility, Fortrea Holdings is 1.05 times less risky than Cyclacel Pharmaceuticals. It trades about 0.01 of its potential returns per unit of risk. Cyclacel Pharmaceuticals is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  704.00  in Cyclacel Pharmaceuticals on October 23, 2024 and sell it today you would earn a total of  146.00  from holding Cyclacel Pharmaceuticals or generate 20.74% return on investment over 90 days.

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

Fortrea Holdings  vs.  Cyclacel Pharmaceuticals

Fortrea Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Fortrea Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, Fortrea Holdings is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Cyclacel Pharmaceuticals

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Cyclacel Pharmaceuticals are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak fundamental indicators, Cyclacel Pharmaceuticals reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Fortrea Holdings and Cyclacel Pharmaceuticals

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

The idea behind Fortrea Holdings and Cyclacel Pharmaceuticals 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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.