Correlation Between Cyclo Therapeutics and Pacira Pharmaceuticals

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

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

Diversification Opportunities for Cyclo Therapeutics and Pacira Pharmaceuticals

0.61

Correlation Coefficient

Cyclo Therapeutics  Pacira Pharmaceuticals

Poor diversification

The 3 months correlation between Cyclo and Pacira is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Cyclo Therapeutics and Pacira Pharmaceuticals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pacira Pharmaceuticals and Cyclo Therapeutics 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 Cyclo Therapeutics are associated (or correlated) with Pacira Pharmaceuticals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pacira Pharmaceuticals has no effect on the direction of Cyclo Therapeutics i.e., Cyclo Therapeutics and Pacira Pharmaceuticals go up and down completely randomly.

Pair Corralation between Cyclo Therapeutics and Pacira Pharmaceuticals

Given the investment horizon of 90 days Cyclo Therapeutics is expected to under-perform the Pacira Pharmaceuticals. In addition to that, Cyclo Therapeutics is 1.72 times more volatile than Pacira Pharmaceuticals. It trades about -0.07 of its total potential returns per unit of risk. Pacira Pharmaceuticals is currently generating about 0.03 per unit of volatility. If you would invest  2,986  in Pacira Pharmaceuticals on February 19, 2024 and sell it today you would earn a total of  96.00  from holding Pacira Pharmaceuticals or generate 3.22% return on investment over 90 days.

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

Cyclo Therapeutics  vs.  Pacira Pharmaceuticals

Cyclo Therapeutics

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pacira Pharmaceuticals

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Pacira Pharmaceuticals are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong basic indicators, Pacira Pharmaceuticals is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Cyclo Therapeutics and Pacira Pharmaceuticals

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

The idea behind Cyclo Therapeutics and Pacira 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.

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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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.