Correlation Between Bio Path and Opthea

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

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

Diversification Opportunities for Bio Path and Opthea

0.45

Correlation Coefficient

Bio Path  Opthea

Very weak diversification

The 3 months correlation between Bio and Opthea is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding Bio Path Holdings and Opthea in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Opthea and Bio Path 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 Bio Path Holdings are associated (or correlated) with Opthea. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Opthea has no effect on the direction of Bio Path i.e., Bio Path and Opthea go up and down completely randomly.

Pair Corralation between Bio Path and Opthea

Given the investment horizon of 90 days Bio Path Holdings is expected to under-perform the Opthea. In addition to that, Bio Path is 2.34 times more volatile than Opthea. It trades about -0.21 of its total potential returns per unit of risk. Opthea is currently generating about 0.02 per unit of volatility. If you would invest  360.00  in Opthea on December 26, 2024 and sell it today you would lose (19.00) from holding Opthea or give up 5.28% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	70.91%
Values	Daily Returns

Bio Path Holdings  vs.  Opthea

Bio Path Holdings

Risk-Adjusted Performance

Very Weak

Over the last 90 days Bio Path Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unfluctuating performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in April 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Opthea

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Opthea are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unfluctuating basic indicators, Opthea may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Bio Path and Opthea

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

The idea behind Bio Path Holdings and Opthea 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.