Correlation Between C Rad and Oncopeptides

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

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

Diversification Opportunities for C Rad and Oncopeptides

0.2

Correlation Coefficient

C Rad  Oncopeptides

Modest diversification

The 3 months correlation between CRAD-B and Oncopeptides is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding C Rad AB and Oncopeptides AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Oncopeptides AB and C Rad 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 C Rad AB are associated (or correlated) with Oncopeptides. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Oncopeptides AB has no effect on the direction of C Rad i.e., C Rad and Oncopeptides go up and down completely randomly.

Pair Corralation between C Rad and Oncopeptides

Assuming the 90 days trading horizon C Rad AB is expected to generate 0.36 times more return on investment than Oncopeptides. However, C Rad AB is 2.76 times less risky than Oncopeptides. It trades about 0.09 of its potential returns per unit of risk. Oncopeptides AB is currently generating about 0.03 per unit of risk. If you would invest  2,965  in C Rad AB on December 4, 2024 and sell it today you would earn a total of  260.00  from holding C Rad AB or generate 8.77% return on investment over 90 days.

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

C Rad AB  vs.  Oncopeptides AB

C Rad AB

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in C Rad AB are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite somewhat uncertain basic indicators, C Rad may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Oncopeptides AB

Risk-Adjusted Performance

Weak

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

Pair Trading with C Rad and Oncopeptides

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

The idea behind C Rad AB and Oncopeptides AB 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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.