Correlation Between Neuropace and Cerus

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

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

Diversification Opportunities for Neuropace and Cerus

0.55

Correlation Coefficient

Neuropace  Cerus

Very weak diversification

The 3 months correlation between Neuropace and Cerus is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding Neuropace and Cerus in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cerus and Neuropace 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 Neuropace are associated (or correlated) with Cerus. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cerus has no effect on the direction of Neuropace i.e., Neuropace and Cerus go up and down completely randomly.

Pair Corralation between Neuropace and Cerus

Given the investment horizon of 90 days Neuropace is expected to generate 1.19 times more return on investment than Cerus. However, Neuropace is 1.19 times more volatile than Cerus. It trades about -0.06 of its potential returns per unit of risk. Cerus is currently generating about -0.17 per unit of risk. If you would invest  1,376  in Neuropace on December 2, 2024 and sell it today you would lose (81.00) from holding Neuropace or give up 5.89% of portfolio value over 90 days.

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

Neuropace  vs.  Cerus

Neuropace

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Neuropace are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady fundamental indicators, Neuropace exhibited solid returns over the last few months and may actually be approaching a breakup point.

Cerus

Risk-Adjusted Performance

Very Weak

Over the last 90 days Cerus has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with Neuropace and Cerus

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

The idea behind Neuropace and Cerus 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.