Correlation Between DiaMedica Therapeutics and Janux Therapeutics

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

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

Diversification Opportunities for DiaMedica Therapeutics and Janux Therapeutics

0.06

Correlation Coefficient

DiaMedica Therapeutics  Janux Therapeutics

Significant diversification

The 3 months correlation between DiaMedica and Janux is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding DiaMedica Therapeutics and Janux Therapeutics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Janux Therapeutics and DiaMedica Therapeutics 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 DiaMedica Therapeutics 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 DiaMedica Therapeutics i.e., DiaMedica Therapeutics and Janux Therapeutics go up and down completely randomly.

Pair Corralation between DiaMedica Therapeutics and Janux Therapeutics

Given the investment horizon of 90 days DiaMedica Therapeutics is expected to generate 1.07 times more return on investment than Janux Therapeutics. However, DiaMedica Therapeutics is 1.07 times more volatile than Janux Therapeutics. It trades about 0.19 of its potential returns per unit of risk. Janux Therapeutics is currently generating about 0.02 per unit of risk. If you would invest  389.00  in DiaMedica Therapeutics on September 3, 2024 and sell it today you would earn a total of  177.00  from holding DiaMedica Therapeutics or generate 45.5% return on investment over 90 days.

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

DiaMedica Therapeutics  vs.  Janux Therapeutics

DiaMedica Therapeutics

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in DiaMedica Therapeutics are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain basic indicators, DiaMedica Therapeutics exhibited solid returns over the last few months and may actually be approaching a breakup point.

Janux Therapeutics

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Janux Therapeutics are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong basic indicators, Janux Therapeutics is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with DiaMedica Therapeutics and Janux Therapeutics

The main advantage of trading using opposite DiaMedica Therapeutics and Janux Therapeutics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if DiaMedica Therapeutics 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 DiaMedica Therapeutics 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.