Correlation Between Public Service and Ondine Biomedical

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

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

Diversification Opportunities for Public Service and Ondine Biomedical

-0.18

Correlation Coefficient

Public Service  Ondine Biomedical

Good diversification

The 3 months correlation between Public and Ondine is -0.18. Overlapping area represents the amount of risk that can be diversified away by holding Public Service Enterprise and Ondine Biomedical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ondine Biomedical and Public Service 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 Public Service Enterprise are associated (or correlated) with Ondine Biomedical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ondine Biomedical has no effect on the direction of Public Service i.e., Public Service and Ondine Biomedical go up and down completely randomly.

Pair Corralation between Public Service and Ondine Biomedical

Assuming the 90 days trading horizon Public Service Enterprise is expected to under-perform the Ondine Biomedical. But the stock apears to be less risky and, when comparing its historical volatility, Public Service Enterprise is 1.77 times less risky than Ondine Biomedical. The stock trades about -0.34 of its potential returns per unit of risk. The Ondine Biomedical is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  825.00  in Ondine Biomedical on September 23, 2024 and sell it today you would earn a total of  25.00  from holding Ondine Biomedical or generate 3.03% return on investment over 90 days.

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

Public Service Enterprise  vs.  Ondine Biomedical

Public Service Enterprise

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Public Service Enterprise has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Public Service is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Ondine Biomedical

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Ondine Biomedical are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady technical and fundamental indicators, Ondine Biomedical exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Public Service and Ondine Biomedical

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

The idea behind Public Service Enterprise and Ondine Biomedical 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.

Check out your portfolio center.

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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.