Correlation Between Vivani Medical and Cognition Therapeutics

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

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

Diversification Opportunities for Vivani Medical and Cognition Therapeutics

-0.6

Correlation Coefficient

Vivani Medical  Cognition Therapeutics

Excellent diversification

The 3 months correlation between Vivani and Cognition is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding Vivani Medical and Cognition Therapeutics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cognition Therapeutics and Vivani Medical 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 Vivani Medical are associated (or correlated) with Cognition Therapeutics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cognition Therapeutics has no effect on the direction of Vivani Medical i.e., Vivani Medical and Cognition Therapeutics go up and down completely randomly.

Pair Corralation between Vivani Medical and Cognition Therapeutics

Given the investment horizon of 90 days Vivani Medical is expected to generate 7.3 times less return on investment than Cognition Therapeutics. But when comparing it to its historical volatility, Vivani Medical is 3.18 times less risky than Cognition Therapeutics. It trades about 0.05 of its potential returns per unit of risk. Cognition Therapeutics is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest  61.00  in Cognition Therapeutics on October 22, 2024 and sell it today you would earn a total of  7.20  from holding Cognition Therapeutics or generate 11.8% return on investment over 90 days.

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

Vivani Medical  vs.  Cognition Therapeutics

Vivani Medical

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Vivani Medical has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong basic indicators, Vivani Medical is not utilizing all of its potentials. The current stock price confusion, may contribute to short-horizon losses for the traders.

Cognition Therapeutics

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Cognition Therapeutics are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Cognition Therapeutics showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Vivani Medical and Cognition Therapeutics

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

The idea behind Vivani Medical and Cognition 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.