Correlation Between Intracellular and Cumberland Pharmaceuticals

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

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

Diversification Opportunities for Intracellular and Cumberland Pharmaceuticals

-0.61

Correlation Coefficient

Intracellular  Cumberland Pharmaceuticals

Excellent diversification

The 3 months correlation between Intracellular and Cumberland is -0.61. Overlapping area represents the amount of risk that can be diversified away by holding Intracellular Th and Cumberland Pharmaceuticals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cumberland Pharmaceuticals and Intracellular 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 Intracellular Th are associated (or correlated) with Cumberland Pharmaceuticals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cumberland Pharmaceuticals has no effect on the direction of Intracellular i.e., Intracellular and Cumberland Pharmaceuticals go up and down completely randomly.

Pair Corralation between Intracellular and Cumberland Pharmaceuticals

Given the investment horizon of 90 days Intracellular Th is expected to generate 0.55 times more return on investment than Cumberland Pharmaceuticals. However, Intracellular Th is 1.82 times less risky than Cumberland Pharmaceuticals. It trades about 0.13 of its potential returns per unit of risk. Cumberland Pharmaceuticals is currently generating about 0.03 per unit of risk. If you would invest  7,300  in Intracellular Th on September 3, 2024 and sell it today you would earn a total of  1,265  from holding Intracellular Th or generate 17.33% return on investment over 90 days.

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

Intracellular Th  vs.  Cumberland Pharmaceuticals

Intracellular Th

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Intracellular Th are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite fairly uncertain fundamental indicators, Intracellular demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Cumberland Pharmaceuticals

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Cumberland Pharmaceuticals are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak forward indicators, Cumberland Pharmaceuticals may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Intracellular and Cumberland Pharmaceuticals

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

The idea behind Intracellular Th and Cumberland 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.