Correlation Between Palatin Technologies and Capricor Therapeutics

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

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

Diversification Opportunities for Palatin Technologies and Capricor Therapeutics

0.39

Correlation Coefficient

Palatin Technologies  Capricor Therapeutics

Weak diversification

The 3 months correlation between Palatin and Capricor is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding Palatin Technologies and Capricor Therapeutics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Capricor Therapeutics and Palatin Technologies 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 Palatin Technologies 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 Palatin Technologies i.e., Palatin Technologies and Capricor Therapeutics go up and down completely randomly.

Pair Corralation between Palatin Technologies and Capricor Therapeutics

Considering the 90-day investment horizon Palatin Technologies is expected to under-perform the Capricor Therapeutics. In addition to that, Palatin Technologies is 1.03 times more volatile than Capricor Therapeutics. It trades about -0.1 of its total potential returns per unit of risk. Capricor Therapeutics is currently generating about 0.01 per unit of volatility. If you would invest  1,408  in Capricor Therapeutics on December 26, 2024 and sell it today you would lose (90.00) from holding Capricor Therapeutics or give up 6.39% of portfolio value over 90 days.

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

Palatin Technologies  vs.  Capricor Therapeutics

Palatin Technologies

Risk-Adjusted Performance

Very Weak

Over the last 90 days Palatin Technologies has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in April 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Capricor Therapeutics

Risk-Adjusted Performance

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 relatively invariable basic indicators, Capricor Therapeutics is not utilizing all of its potentials. The recent stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Palatin Technologies and Capricor Therapeutics

The main advantage of trading using opposite Palatin Technologies and Capricor Therapeutics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Palatin Technologies 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 Palatin Technologies 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.