Correlation Between Champions Oncology and Janux Therapeutics

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

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

Diversification Opportunities for Champions Oncology and Janux Therapeutics

-0.65

Correlation Coefficient

Champions Oncology  Janux Therapeutics

Excellent diversification

The 3 months correlation between Champions and Janux is -0.65. Overlapping area represents the amount of risk that can be diversified away by holding Champions Oncology and Janux Therapeutics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Janux Therapeutics and Champions Oncology 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 Champions Oncology are associated (or correlated) with Janux Therapeutics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Janux Therapeutics has no effect on the direction of Champions Oncology i.e., Champions Oncology and Janux Therapeutics go up and down completely randomly.

Pair Corralation between Champions Oncology and Janux Therapeutics

Given the investment horizon of 90 days Champions Oncology is expected to generate 1.16 times more return on investment than Janux Therapeutics. However, Champions Oncology is 1.16 times more volatile than Janux Therapeutics. It trades about 0.0 of its potential returns per unit of risk. Janux Therapeutics is currently generating about -0.27 per unit of risk. If you would invest  1,073  in Champions Oncology on November 29, 2024 and sell it today you would lose (20.00) from holding Champions Oncology or give up 1.86% of portfolio value over 90 days.

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

Champions Oncology  vs.  Janux Therapeutics

Champions Oncology

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Champions Oncology are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. Even with relatively unfluctuating fundamental drivers, Champions Oncology reported solid returns over the last few months and may actually be approaching a breakup point.

Janux Therapeutics

Risk-Adjusted Performance

Very Weak

Over the last 90 days Janux Therapeutics has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in March 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Champions Oncology and Janux Therapeutics

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

The idea behind Champions Oncology and Janux Therapeutics 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.