Correlation Between ISU Abxis and OLIPASS

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

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

Diversification Opportunities for ISU Abxis and OLIPASS

-0.63

Correlation Coefficient

ISU Abxis  OLIPASS

Excellent diversification

The 3 months correlation between ISU and OLIPASS is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding ISU Abxis Co and OLIPASS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on OLIPASS and ISU Abxis 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 ISU Abxis Co are associated (or correlated) with OLIPASS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of OLIPASS has no effect on the direction of ISU Abxis i.e., ISU Abxis and OLIPASS go up and down completely randomly.

Pair Corralation between ISU Abxis and OLIPASS

Assuming the 90 days trading horizon ISU Abxis Co is expected to under-perform the OLIPASS. But the stock apears to be less risky and, when comparing its historical volatility, ISU Abxis Co is 1.91 times less risky than OLIPASS. The stock trades about -0.22 of its potential returns per unit of risk. The OLIPASS is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest  517,000  in OLIPASS on October 7, 2024 and sell it today you would lose (40,000) from holding OLIPASS or give up 7.74% of portfolio value over 90 days.

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

ISU Abxis Co  vs.  OLIPASS

ISU Abxis

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ISU Abxis Co 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 basic indicators remain somewhat strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

OLIPASS

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in OLIPASS are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, OLIPASS may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with ISU Abxis and OLIPASS

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

The idea behind ISU Abxis Co and OLIPASS 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..