Correlation Between Butterfly Network and Ono Pharmaceutical

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

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

Diversification Opportunities for Butterfly Network and Ono Pharmaceutical

-0.91

Correlation Coefficient

Butterfly Network  Ono Pharmaceutical

Pay attention - limited upside

The 3 months correlation between Butterfly and Ono is -0.91. Overlapping area represents the amount of risk that can be diversified away by holding Butterfly Network and Ono Pharmaceutical Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ono Pharmaceutical and Butterfly Network 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 Butterfly Network are associated (or correlated) with Ono Pharmaceutical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ono Pharmaceutical has no effect on the direction of Butterfly Network i.e., Butterfly Network and Ono Pharmaceutical go up and down completely randomly.

Pair Corralation between Butterfly Network and Ono Pharmaceutical

Given the investment horizon of 90 days Butterfly Network is expected to generate 3.95 times more return on investment than Ono Pharmaceutical. However, Butterfly Network is 3.95 times more volatile than Ono Pharmaceutical Co. It trades about 0.3 of its potential returns per unit of risk. Ono Pharmaceutical Co is currently generating about -0.21 per unit of risk. If you would invest  256.00  in Butterfly Network on September 15, 2024 and sell it today you would earn a total of  98.00  from holding Butterfly Network or generate 38.28% return on investment over 90 days.

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

Butterfly Network  vs.  Ono Pharmaceutical Co

Butterfly Network

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Butterfly Network are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak essential indicators, Butterfly Network showed solid returns over the last few months and may actually be approaching a breakup point.

Ono Pharmaceutical

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Ono Pharmaceutical Co 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 essential indicators remain fairly strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Butterfly Network and Ono Pharmaceutical

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

The idea behind Butterfly Network and Ono Pharmaceutical Co 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.