Correlation Between XOMA and Cingulate

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

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

Diversification Opportunities for XOMA and Cingulate

-0.71

Correlation Coefficient

XOMA  Cingulate

Pay attention - limited upside

The 3 months correlation between XOMA and Cingulate is -0.71. Overlapping area represents the amount of risk that can be diversified away by holding XOMA Corp. and Cingulate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cingulate and XOMA 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 XOMA Corporation 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 XOMA i.e., XOMA and Cingulate go up and down completely randomly.

Pair Corralation between XOMA and Cingulate

Assuming the 90 days horizon XOMA Corporation is expected to generate 0.07 times more return on investment than Cingulate. However, XOMA Corporation is 15.22 times less risky than Cingulate. It trades about 0.12 of its potential returns per unit of risk. Cingulate is currently generating about -0.04 per unit of risk. If you would invest  2,469  in XOMA Corporation on September 13, 2024 and sell it today you would earn a total of  71.00  from holding XOMA Corporation or generate 2.88% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	98.44%
Values	Daily Returns

XOMA Corp.  vs.  Cingulate

XOMA

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in XOMA Corporation are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, XOMA is not utilizing all of its potentials. The latest 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 XOMA and Cingulate

The main advantage of trading using opposite XOMA and Cingulate positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if XOMA 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 XOMA Corporation 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.

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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.