Correlation Between Exagen and Capricor Therapeutics

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

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

Diversification Opportunities for Exagen and Capricor Therapeutics

-0.8

Correlation Coefficient

Exagen  Capricor Therapeutics

Pay attention - limited upside

The 3 months correlation between Exagen and Capricor is -0.8. Overlapping area represents the amount of risk that can be diversified away by holding Exagen Inc and Capricor Therapeutics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Capricor Therapeutics and Exagen 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 Exagen Inc 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 Exagen i.e., Exagen and Capricor Therapeutics go up and down completely randomly.

Pair Corralation between Exagen and Capricor Therapeutics

Considering the 90-day investment horizon Exagen Inc is expected to under-perform the Capricor Therapeutics. In addition to that, Exagen is 1.98 times more volatile than Capricor Therapeutics. It trades about -0.06 of its total potential returns per unit of risk. Capricor Therapeutics is currently generating about 0.22 per unit of volatility. If you would invest  1,272  in Capricor Therapeutics on October 5, 2024 and sell it today you would earn a total of  289.00  from holding Capricor Therapeutics or generate 22.72% return on investment over 90 days.

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

Exagen Inc  vs.  Capricor Therapeutics

Exagen Inc

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Exagen Inc are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of very weak technical and fundamental indicators, Exagen displayed solid returns over the last few months and may actually be approaching a breakup point.

Capricor Therapeutics

Risk-Adjusted Performance

0 of 100

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 Exagen and Capricor Therapeutics

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

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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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.