Correlation Between Reviva Pharmaceuticals and Capricor Therapeutics

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

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

Diversification Opportunities for Reviva Pharmaceuticals and Capricor Therapeutics

0.33

Correlation Coefficient

Reviva Pharmaceuticals  Capricor Therapeutics

Weak diversification

The 3 months correlation between Reviva and Capricor is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding Reviva Pharmaceuticals Holding and Capricor Therapeutics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Capricor Therapeutics and Reviva Pharmaceuticals 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 Reviva Pharmaceuticals Holdings 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 Reviva Pharmaceuticals i.e., Reviva Pharmaceuticals and Capricor Therapeutics go up and down completely randomly.

Pair Corralation between Reviva Pharmaceuticals and Capricor Therapeutics

Assuming the 90 days horizon Reviva Pharmaceuticals Holdings is expected to under-perform the Capricor Therapeutics. In addition to that, Reviva Pharmaceuticals is 3.18 times more volatile than Capricor Therapeutics. It trades about -0.02 of its total potential returns per unit of risk. Capricor Therapeutics is currently generating about 0.0 per unit of volatility. If you would invest  1,413  in Capricor Therapeutics on December 22, 2024 and sell it today you would lose (127.00) from holding Capricor Therapeutics or give up 8.99% of portfolio value over 90 days.

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

Reviva Pharmaceuticals Holding  vs.  Capricor Therapeutics

Reviva Pharmaceuticals

Risk-Adjusted Performance

Very Weak

Over the last 90 days Reviva Pharmaceuticals Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of inconsistent performance in the last few months, the Stock's technical indicators remain fairly stable which may send shares a bit higher in April 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated 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 Reviva Pharmaceuticals and Capricor Therapeutics

The main advantage of trading using opposite Reviva Pharmaceuticals and Capricor Therapeutics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Reviva Pharmaceuticals 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 Reviva Pharmaceuticals Holdings 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.

Check out your portfolio center.

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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.