Correlation Between GH Research and Capricor Therapeutics

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

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

Diversification Opportunities for GH Research and Capricor Therapeutics

0.19

Correlation Coefficient

GH Research  Capricor Therapeutics

Average diversification

The 3 months correlation between GHRS and Capricor is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding GH Research PLC and Capricor Therapeutics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Capricor Therapeutics and GH Research 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 GH Research PLC are associated (or correlated) with Capricor Therapeutics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Capricor Therapeutics has no effect on the direction of GH Research i.e., GH Research and Capricor Therapeutics go up and down completely randomly.

Pair Corralation between GH Research and Capricor Therapeutics

Given the investment horizon of 90 days GH Research PLC is expected to generate 1.27 times more return on investment than Capricor Therapeutics. However, GH Research is 1.27 times more volatile than Capricor Therapeutics. It trades about 0.29 of its potential returns per unit of risk. Capricor Therapeutics is currently generating about 0.08 per unit of risk. If you would invest  685.00  in GH Research PLC on October 21, 2024 and sell it today you would earn a total of  203.00  from holding GH Research PLC or generate 29.64% return on investment over 90 days.

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

GH Research PLC  vs.  Capricor Therapeutics

GH Research PLC

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in GH Research PLC are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unfluctuating basic indicators, GH Research unveiled solid returns over the last few months and may actually be approaching a breakup point.

Capricor Therapeutics

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Capricor Therapeutics has generated negative risk-adjusted returns adding no value to investors with long positions. Even with inconsistent performance in the last few months, the Stock's basic indicators remain relatively invariable which may send shares a bit higher in February 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Pair Trading with GH Research and Capricor Therapeutics

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

The idea behind GH Research PLC and Capricor Therapeutics 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.