Correlation Between Cyclacel Pharmaceuticals and Nephros

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

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

Diversification Opportunities for Cyclacel Pharmaceuticals and Nephros

0.55

Correlation Coefficient

Cyclacel Pharmaceuticals  Nephros

Very weak diversification

The 3 months correlation between Cyclacel and Nephros is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding Cyclacel Pharmaceuticals and Nephros in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nephros and Cyclacel 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 Cyclacel Pharmaceuticals are associated (or correlated) with Nephros. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nephros has no effect on the direction of Cyclacel Pharmaceuticals i.e., Cyclacel Pharmaceuticals and Nephros go up and down completely randomly.

Pair Corralation between Cyclacel Pharmaceuticals and Nephros

Given the investment horizon of 90 days Cyclacel Pharmaceuticals is expected to under-perform the Nephros. In addition to that, Cyclacel Pharmaceuticals is 1.42 times more volatile than Nephros. It trades about -0.04 of its total potential returns per unit of risk. Nephros is currently generating about 0.03 per unit of volatility. If you would invest  175.00  in Nephros on January 25, 2024 and sell it today you would earn a total of  39.00  from holding Nephros or generate 22.29% return on investment over 90 days.

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

Cyclacel Pharmaceuticals  vs.  Nephros

Cyclacel Pharmaceuticals

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Cyclacel Pharmaceuticals has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound fundamental indicators, Cyclacel Pharmaceuticals is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Nephros

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Nephros has generated negative risk-adjusted returns adding no value to investors with long positions. Despite inconsistent performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in May 2024. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Pair Trading with Cyclacel Pharmaceuticals and Nephros

The main advantage of trading using opposite Cyclacel Pharmaceuticals and Nephros positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cyclacel Pharmaceuticals position performs unexpectedly, Nephros 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 Nephros will offset losses from the drop in Nephros' long position.

The idea behind Cyclacel Pharmaceuticals and Nephros 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 Transaction History module to view history of all your transactions and understand their impact on performance.