Correlation Between Proficient Auto and Cumberland Pharmaceuticals

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Can any of the company-specific risk be diversified away by investing in both Proficient Auto and Cumberland 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 Proficient Auto and Cumberland Pharmaceuticals into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Proficient Auto Logistics, and Cumberland Pharmaceuticals, you can compare the effects of market volatilities on Proficient Auto and Cumberland 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 Proficient Auto with a short position of Cumberland Pharmaceuticals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Proficient Auto and Cumberland Pharmaceuticals.

Diversification Opportunities for Proficient Auto and Cumberland Pharmaceuticals

0.69
  Correlation Coefficient

Poor diversification

The 3 months correlation between Proficient and Cumberland is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Proficient Auto Logistics, and Cumberland Pharmaceuticals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cumberland Pharmaceuticals and Proficient Auto 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 Proficient Auto Logistics, are associated (or correlated) with Cumberland Pharmaceuticals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cumberland Pharmaceuticals has no effect on the direction of Proficient Auto i.e., Proficient Auto and Cumberland Pharmaceuticals go up and down completely randomly.

Pair Corralation between Proficient Auto and Cumberland Pharmaceuticals

Considering the 90-day investment horizon Proficient Auto Logistics, is expected to under-perform the Cumberland Pharmaceuticals. But the stock apears to be less risky and, when comparing its historical volatility, Proficient Auto Logistics, is 1.12 times less risky than Cumberland Pharmaceuticals. The stock trades about -0.05 of its potential returns per unit of risk. The Cumberland Pharmaceuticals is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  165.00  in Cumberland Pharmaceuticals on August 31, 2024 and sell it today you would lose (25.00) from holding Cumberland Pharmaceuticals or give up 15.15% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy38.24%
ValuesDaily Returns

Proficient Auto Logistics,  vs.  Cumberland Pharmaceuticals

 Performance 
       Timeline  
Proficient Auto Logi 

Risk-Adjusted Performance

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Weak
 
Strong
Very Weak
Over the last 90 days Proficient Auto Logistics, has generated negative risk-adjusted returns adding no value to investors with long positions. Despite abnormal performance in the last few months, the Stock's basic indicators remain quite persistent which may send shares a bit higher in December 2024. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.
Cumberland Pharmaceuticals 

Risk-Adjusted Performance

1 of 100

 
Weak
 
Strong
Weak
Compared to the overall equity markets, risk-adjusted returns on investments in Cumberland Pharmaceuticals are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong forward indicators, Cumberland Pharmaceuticals is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Proficient Auto and Cumberland Pharmaceuticals Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Proficient Auto and Cumberland Pharmaceuticals

The main advantage of trading using opposite Proficient Auto and Cumberland Pharmaceuticals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Proficient Auto position performs unexpectedly, Cumberland 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 Cumberland Pharmaceuticals will offset losses from the drop in Cumberland Pharmaceuticals' long position.
The idea behind Proficient Auto Logistics, and Cumberland 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.
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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.

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