Correlation Between XOMA and Cyclacel Pharmaceuticals

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

Diversification Opportunities for XOMA and Cyclacel Pharmaceuticals

-0.68
  Correlation Coefficient

Excellent diversification

The 3 months correlation between XOMA and Cyclacel is -0.68. Overlapping area represents the amount of risk that can be diversified away by holding XOMA Corp. and Cyclacel Pharmaceuticals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cyclacel Pharmaceuticals 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 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 XOMA i.e., XOMA and Cyclacel Pharmaceuticals go up and down completely randomly.

Pair Corralation between XOMA and Cyclacel Pharmaceuticals

Assuming the 90 days horizon XOMA Corporation is expected to under-perform the Cyclacel Pharmaceuticals. But the preferred stock apears to be less risky and, when comparing its historical volatility, XOMA Corporation is 31.63 times less risky than Cyclacel Pharmaceuticals. The preferred stock trades about -0.39 of its potential returns per unit of risk. The Cyclacel Pharmaceuticals is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest  717.00  in Cyclacel Pharmaceuticals on August 27, 2024 and sell it today you would lose (23.00) from holding Cyclacel Pharmaceuticals or give up 3.21% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthWeak
Accuracy100.0%
ValuesDaily Returns

XOMA Corp.  vs.  Cyclacel Pharmaceuticals

 Performance 
       Timeline  
XOMA 

Risk-Adjusted Performance

4 of 100

 
Weak
 
Strong
Insignificant
Compared to the overall equity markets, risk-adjusted returns on investments in XOMA Corporation are ranked lower than 4 (%) 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.
Cyclacel Pharmaceuticals 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Cyclacel Pharmaceuticals has generated negative risk-adjusted returns adding no value to investors with long positions. Even with inconsistent performance in the last few months, the Preferred Stock's fundamental indicators remain relatively invariable which may send shares a bit higher in December 2024. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

XOMA and Cyclacel Pharmaceuticals Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with XOMA and Cyclacel Pharmaceuticals

The main advantage of trading using opposite XOMA and Cyclacel Pharmaceuticals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if XOMA 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 XOMA Corporation 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.
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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.

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