Correlation Between Cornish Metals and Ondine Biomedical

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

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

Diversification Opportunities for Cornish Metals and Ondine Biomedical

-0.25

Correlation Coefficient

Cornish Metals  Ondine Biomedical

Very good diversification

The 3 months correlation between Cornish and Ondine is -0.25. Overlapping area represents the amount of risk that can be diversified away by holding Cornish Metals and Ondine Biomedical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ondine Biomedical and Cornish Metals 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 Cornish Metals are associated (or correlated) with Ondine Biomedical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ondine Biomedical has no effect on the direction of Cornish Metals i.e., Cornish Metals and Ondine Biomedical go up and down completely randomly.

Pair Corralation between Cornish Metals and Ondine Biomedical

Assuming the 90 days trading horizon Cornish Metals is expected to under-perform the Ondine Biomedical. But the stock apears to be less risky and, when comparing its historical volatility, Cornish Metals is 2.06 times less risky than Ondine Biomedical. The stock trades about -0.02 of its potential returns per unit of risk. The Ondine Biomedical is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  850.00  in Ondine Biomedical on December 23, 2024 and sell it today you would earn a total of  175.00  from holding Ondine Biomedical or generate 20.59% return on investment over 90 days.

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

Cornish Metals  vs.  Ondine Biomedical

Cornish Metals

Risk-Adjusted Performance

Very Weak

Over the last 90 days Cornish Metals has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Cornish Metals is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Ondine Biomedical

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Ondine Biomedical are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain technical and fundamental indicators, Ondine Biomedical exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Cornish Metals and Ondine Biomedical

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

The idea behind Cornish Metals and Ondine Biomedical 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.