Correlation Between TRACON Pharmaceuticals and Cingulate

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

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

Diversification Opportunities for TRACON Pharmaceuticals and Cingulate

0.73

Correlation Coefficient

TRACON Pharmaceuticals  Cingulate

Poor diversification

The 3 months correlation between TRACON and Cingulate is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding TRACON Pharmaceuticals and Cingulate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cingulate and TRACON 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 TRACON Pharmaceuticals are associated (or correlated) with Cingulate. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cingulate has no effect on the direction of TRACON Pharmaceuticals i.e., TRACON Pharmaceuticals and Cingulate go up and down completely randomly.

Pair Corralation between TRACON Pharmaceuticals and Cingulate

Given the investment horizon of 90 days TRACON Pharmaceuticals is expected to generate 90.94 times less return on investment than Cingulate. But when comparing it to its historical volatility, TRACON Pharmaceuticals is 2.08 times less risky than Cingulate. It trades about 0.0 of its potential returns per unit of risk. Cingulate is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  15,456  in Cingulate on September 12, 2024 and sell it today you would lose (15,028) from holding Cingulate or give up 97.23% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	65.56%
Values	Daily Returns

TRACON Pharmaceuticals  vs.  Cingulate

TRACON Pharmaceuticals

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days TRACON Pharmaceuticals has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, TRACON Pharmaceuticals is not utilizing all of its potentials. The newest stock price disarray, may contribute to short-term losses for the investors.

Cingulate

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Cingulate 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 basic indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with TRACON Pharmaceuticals and Cingulate

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

The idea behind TRACON Pharmaceuticals and Cingulate 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.