Correlation Between Cardiol Therapeutics and CHAR Technologies

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

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

Diversification Opportunities for Cardiol Therapeutics and CHAR Technologies

0.74

Correlation Coefficient

Cardiol Therapeutics  CHAR Technologies

Poor diversification

The 3 months correlation between Cardiol and CHAR is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Cardiol Therapeutics Class and CHAR Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CHAR Technologies and Cardiol 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 Cardiol Therapeutics Class are associated (or correlated) with CHAR Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CHAR Technologies has no effect on the direction of Cardiol Therapeutics i.e., Cardiol Therapeutics and CHAR Technologies go up and down completely randomly.

Pair Corralation between Cardiol Therapeutics and CHAR Technologies

Assuming the 90 days trading horizon Cardiol Therapeutics is expected to generate 2.29 times less return on investment than CHAR Technologies. But when comparing it to its historical volatility, Cardiol Therapeutics Class is 1.59 times less risky than CHAR Technologies. It trades about 0.07 of its potential returns per unit of risk. CHAR Technologies is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  20.00  in CHAR Technologies on April 23, 2025 and sell it today you would earn a total of  6.00  from holding CHAR Technologies or generate 30.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.41%
Values	Daily Returns

Cardiol Therapeutics Class  vs.  CHAR Technologies

Cardiol Therapeutics

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Cardiol Therapeutics Class are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Cardiol Therapeutics displayed solid returns over the last few months and may actually be approaching a breakup point.

CHAR Technologies

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in CHAR Technologies are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, CHAR Technologies showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Cardiol Therapeutics and CHAR Technologies

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

The idea behind Cardiol Therapeutics Class and CHAR Technologies 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.