Correlation Between InflaRx NV and Cyclacel Pharmaceuticals

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

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

Diversification Opportunities for InflaRx NV and Cyclacel Pharmaceuticals

-0.35

Correlation Coefficient

InflaRx NV  Cyclacel Pharmaceuticals

Very good diversification

The 3 months correlation between InflaRx and Cyclacel is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding InflaRx NV and Cyclacel Pharmaceuticals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cyclacel Pharmaceuticals and InflaRx NV 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 InflaRx NV 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 InflaRx NV i.e., InflaRx NV and Cyclacel Pharmaceuticals go up and down completely randomly.

Pair Corralation between InflaRx NV and Cyclacel Pharmaceuticals

Given the investment horizon of 90 days InflaRx NV is expected to under-perform the Cyclacel Pharmaceuticals. But the stock apears to be less risky and, when comparing its historical volatility, InflaRx NV is 1.4 times less risky than Cyclacel Pharmaceuticals. The stock trades about -0.11 of its potential returns per unit of risk. The Cyclacel Pharmaceuticals is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest  645.00  in Cyclacel Pharmaceuticals on October 9, 2024 and sell it today you would earn a total of  100.00  from holding Cyclacel Pharmaceuticals or generate 15.5% return on investment over 90 days.

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

InflaRx NV  vs.  Cyclacel Pharmaceuticals

InflaRx NV

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in InflaRx NV are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unfluctuating basic indicators, InflaRx NV showed solid returns over the last few months and may actually be approaching a breakup point.

Cyclacel Pharmaceuticals

Risk-Adjusted Performance

1 of 100

Weak

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

Pair Trading with InflaRx NV and Cyclacel Pharmaceuticals

The main advantage of trading using opposite InflaRx NV and Cyclacel Pharmaceuticals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if InflaRx NV 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 InflaRx NV 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.