Correlation Between Small Cap and COSCIENS Biopharma

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

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

Diversification Opportunities for Small Cap and COSCIENS Biopharma

-0.74

Correlation Coefficient

Small Cap  COSCIENS Biopharma

Pay attention - limited upside

The 3 months correlation between Small and COSCIENS is -0.74. Overlapping area represents the amount of risk that can be diversified away by holding Small Cap Premium and COSCIENS Biopharma in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on COSCIENS Biopharma and Small Cap 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 Small Cap Premium are associated (or correlated) with COSCIENS Biopharma. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of COSCIENS Biopharma has no effect on the direction of Small Cap i.e., Small Cap and COSCIENS Biopharma go up and down completely randomly.

Pair Corralation between Small Cap and COSCIENS Biopharma

Considering the 90-day investment horizon Small Cap Premium is expected to generate 0.11 times more return on investment than COSCIENS Biopharma. However, Small Cap Premium is 8.98 times less risky than COSCIENS Biopharma. It trades about -0.03 of its potential returns per unit of risk. COSCIENS Biopharma is currently generating about -0.13 per unit of risk. If you would invest  2,456  in Small Cap Premium on September 19, 2024 and sell it today you would lose (6.00) from holding Small Cap Premium or give up 0.24% of portfolio value over 90 days.

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

Small Cap Premium  vs.  COSCIENS Biopharma

Small Cap Premium

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Small Cap Premium are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound fundamental indicators, Small Cap is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

COSCIENS Biopharma

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days COSCIENS Biopharma has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's fundamental indicators remain fairly strong which may send shares a bit higher in January 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Pair Trading with Small Cap and COSCIENS Biopharma

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

The idea behind Small Cap Premium and COSCIENS Biopharma 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.