Correlation Between Cytodyn and Onconova Therapeutics

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

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

Diversification Opportunities for Cytodyn and Onconova Therapeutics

0.29

Correlation Coefficient

Cytodyn  Onconova Therapeutics

Modest diversification

The 3 months correlation between Cytodyn and Onconova is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding Cytodyn and Onconova Therapeutics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Onconova Therapeutics and Cytodyn 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 Cytodyn are associated (or correlated) with Onconova Therapeutics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Onconova Therapeutics has no effect on the direction of Cytodyn i.e., Cytodyn and Onconova Therapeutics go up and down completely randomly.

Pair Corralation between Cytodyn and Onconova Therapeutics

Given the investment horizon of 90 days Cytodyn is expected to generate 6.17 times less return on investment than Onconova Therapeutics. But when comparing it to its historical volatility, Cytodyn is 1.11 times less risky than Onconova Therapeutics. It trades about 0.01 of its potential returns per unit of risk. Onconova Therapeutics is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  66.00  in Onconova Therapeutics on September 11, 2024 and sell it today you would earn a total of  36.00  from holding Onconova Therapeutics or generate 54.55% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	29.76%
Values	Daily Returns

Cytodyn  vs.  Onconova Therapeutics

Cytodyn

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Cytodyn has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's fundamental indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Onconova Therapeutics

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Onconova Therapeutics has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, Onconova Therapeutics is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Cytodyn and Onconova Therapeutics

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

The idea behind Cytodyn and Onconova 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.