Correlation Between FibroBiologics Common and CERo Therapeutics

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

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

Diversification Opportunities for FibroBiologics Common and CERo Therapeutics

0.52

Correlation Coefficient

FibroBiologics Common  CERo Therapeutics

Very weak diversification

The 3 months correlation between FibroBiologics and CERo is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding FibroBiologics Common Stock and CERo Therapeutics Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CERo Therapeutics and FibroBiologics Common 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 FibroBiologics Common Stock are associated (or correlated) with CERo Therapeutics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CERo Therapeutics has no effect on the direction of FibroBiologics Common i.e., FibroBiologics Common and CERo Therapeutics go up and down completely randomly.

Pair Corralation between FibroBiologics Common and CERo Therapeutics

Given the investment horizon of 90 days FibroBiologics Common Stock is expected to under-perform the CERo Therapeutics. But the stock apears to be less risky and, when comparing its historical volatility, FibroBiologics Common Stock is 2.34 times less risky than CERo Therapeutics. The stock trades about -0.22 of its potential returns per unit of risk. The CERo Therapeutics Holdings is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  3.58  in CERo Therapeutics Holdings on April 4, 2024 and sell it today you would lose (2.18) from holding CERo Therapeutics Holdings or give up 60.89% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	95.45%
Values	Daily Returns

FibroBiologics Common Stock  vs.  CERo Therapeutics Holdings

FibroBiologics Common

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days FibroBiologics Common Stock has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's essential indicators remain nearly stable which may send shares a bit higher in August 2024. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

CERo Therapeutics

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days CERo Therapeutics Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in August 2024. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Pair Trading with FibroBiologics Common and CERo Therapeutics

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

The idea behind FibroBiologics Common Stock and CERo Therapeutics Holdings 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.