Correlation Between Denali Therapeutics and Ocugen

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

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

Diversification Opportunities for Denali Therapeutics and Ocugen

0.85

Correlation Coefficient

Denali Therapeutics  Ocugen

Very poor diversification

The 3 months correlation between Denali and Ocugen is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Denali Therapeutics and Ocugen Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ocugen Inc and Denali 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 Denali Therapeutics are associated (or correlated) with Ocugen. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ocugen Inc has no effect on the direction of Denali Therapeutics i.e., Denali Therapeutics and Ocugen go up and down completely randomly.

Pair Corralation between Denali Therapeutics and Ocugen

Given the investment horizon of 90 days Denali Therapeutics is expected to generate 1.02 times more return on investment than Ocugen. However, Denali Therapeutics is 1.02 times more volatile than Ocugen Inc. It trades about 0.13 of its potential returns per unit of risk. Ocugen Inc is currently generating about 0.04 per unit of risk. If you would invest  2,078  in Denali Therapeutics on October 23, 2024 and sell it today you would earn a total of  226.00  from holding Denali Therapeutics or generate 10.88% return on investment over 90 days.

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

Denali Therapeutics  vs.  Ocugen Inc

Denali Therapeutics

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Denali Therapeutics has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's essential indicators remain strong and the recent confusion on Wall Street may also be a sign of long-lasting gains for the firm traders.

Ocugen Inc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Ocugen Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's technical and fundamental indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Pair Trading with Denali Therapeutics and Ocugen

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

The idea behind Denali Therapeutics and Ocugen Inc 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 Commodity Directory module to find actively traded commodities issued by global exchanges.