Correlation Between Viracta Therapeutics and Cyclacel Pharmaceuticals

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

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

Diversification Opportunities for Viracta Therapeutics and Cyclacel Pharmaceuticals

0.88

Correlation Coefficient

Viracta Therapeutics  Cyclacel Pharmaceuticals

Very poor diversification

The 3 months correlation between Viracta and Cyclacel is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Viracta Therapeutics and Cyclacel Pharmaceuticals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cyclacel Pharmaceuticals and Viracta Therapeutics 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 Viracta Therapeutics are associated (or correlated) with Cyclacel Pharmaceuticals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cyclacel Pharmaceuticals has no effect on the direction of Viracta Therapeutics i.e., Viracta Therapeutics and Cyclacel Pharmaceuticals go up and down completely randomly.

Pair Corralation between Viracta Therapeutics and Cyclacel Pharmaceuticals

Given the investment horizon of 90 days Viracta Therapeutics is expected to generate 0.57 times more return on investment than Cyclacel Pharmaceuticals. However, Viracta Therapeutics is 1.76 times less risky than Cyclacel Pharmaceuticals. It trades about -0.1 of its potential returns per unit of risk. Cyclacel Pharmaceuticals is currently generating about -0.12 per unit of risk. If you would invest  23.00  in Viracta Therapeutics on September 5, 2024 and sell it today you would lose (7.00) from holding Viracta Therapeutics or give up 30.43% of portfolio value over 90 days.

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

Viracta Therapeutics  vs.  Cyclacel Pharmaceuticals

Viracta Therapeutics

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Viracta Therapeutics has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of conflicting performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Cyclacel Pharmaceuticals

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Cyclacel Pharmaceuticals 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 fundamental indicators remain rather sound which may send shares a bit higher in January 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with Viracta Therapeutics and Cyclacel Pharmaceuticals

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

The idea behind Viracta Therapeutics and Cyclacel Pharmaceuticals 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.