Correlation Between OLIPASS and OliX PharmaceuticalsI

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

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

Diversification Opportunities for OLIPASS and OliX PharmaceuticalsI

0.69

Correlation Coefficient

OLIPASS  OliX PharmaceuticalsI

Poor diversification

The 3 months correlation between OLIPASS and OliX is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding OLIPASS and OliX PharmaceuticalsInc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on OliX PharmaceuticalsInc and OLIPASS 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 OLIPASS are associated (or correlated) with OliX PharmaceuticalsI. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of OliX PharmaceuticalsInc has no effect on the direction of OLIPASS i.e., OLIPASS and OliX PharmaceuticalsI go up and down completely randomly.

Pair Corralation between OLIPASS and OliX PharmaceuticalsI

Assuming the 90 days trading horizon OLIPASS is expected to generate 0.86 times more return on investment than OliX PharmaceuticalsI. However, OLIPASS is 1.16 times less risky than OliX PharmaceuticalsI. It trades about -0.11 of its potential returns per unit of risk. OliX PharmaceuticalsInc is currently generating about -0.15 per unit of risk. If you would invest  471,000  in OLIPASS on October 22, 2024 and sell it today you would lose (168,000) from holding OLIPASS or give up 35.67% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	90.32%
Values	Daily Returns

OLIPASS  vs.  OliX PharmaceuticalsInc

OLIPASS

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days OLIPASS 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.

OliX PharmaceuticalsInc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days OliX PharmaceuticalsInc 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.

Pair Trading with OLIPASS and OliX PharmaceuticalsI

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

The idea behind OLIPASS and OliX PharmaceuticalsInc 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.