Correlation Between Cipher Pharmaceuticals and Knight Therapeutics
Can any of the company-specific risk be diversified away by investing in both Cipher Pharmaceuticals and Knight 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 Cipher Pharmaceuticals and Knight Therapeutics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cipher Pharmaceuticals and Knight Therapeutics, you can compare the effects of market volatilities on Cipher Pharmaceuticals and Knight 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 Cipher Pharmaceuticals with a short position of Knight Therapeutics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cipher Pharmaceuticals and Knight Therapeutics.
Diversification Opportunities for Cipher Pharmaceuticals and Knight Therapeutics
0.27 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Cipher and Knight is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding Cipher Pharmaceuticals and Knight Therapeutics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Knight Therapeutics and Cipher 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 Cipher Pharmaceuticals are associated (or correlated) with Knight Therapeutics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Knight Therapeutics has no effect on the direction of Cipher Pharmaceuticals i.e., Cipher Pharmaceuticals and Knight Therapeutics go up and down completely randomly.
Pair Corralation between Cipher Pharmaceuticals and Knight Therapeutics
Assuming the 90 days trading horizon Cipher Pharmaceuticals is expected to under-perform the Knight Therapeutics. In addition to that, Cipher Pharmaceuticals is 1.51 times more volatile than Knight Therapeutics. It trades about -0.09 of its total potential returns per unit of risk. Knight Therapeutics is currently generating about -0.1 per unit of volatility. If you would invest 567.00 in Knight Therapeutics on August 28, 2024 and sell it today you would lose (38.00) from holding Knight Therapeutics or give up 6.7% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Cipher Pharmaceuticals vs. Knight Therapeutics
Performance |
| Timeline |
| Cipher Pharmaceuticals |
| Knight Therapeutics |
Cipher Pharmaceuticals and Knight Therapeutics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cipher Pharmaceuticals and Knight Therapeutics
The main advantage of trading using opposite Cipher Pharmaceuticals and Knight Therapeutics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cipher Pharmaceuticals position performs unexpectedly, Knight 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 Knight Therapeutics will offset losses from the drop in Knight Therapeutics' long position.| Cipher Pharmaceuticals vs. Auxly Cannabis Group | Cipher Pharmaceuticals vs. Entourage Health Corp | Cipher Pharmaceuticals vs. iShares Canadian HYBrid | Cipher Pharmaceuticals vs. Altagas Cum Red |
| Knight Therapeutics vs. Stella Jones | Knight Therapeutics vs. Richelieu Hardware | Knight Therapeutics vs. Element Fleet Management | Knight Therapeutics vs. ECN Capital Corp |
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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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