Correlation Between Eupraxia Pharmaceuticals and XOMA Corp

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

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

Diversification Opportunities for Eupraxia Pharmaceuticals and XOMA Corp

-0.64

Correlation Coefficient

Eupraxia Pharmaceuticals  XOMA Corp

Excellent diversification

The 3 months correlation between Eupraxia and XOMA is -0.64. Overlapping area represents the amount of risk that can be diversified away by holding Eupraxia Pharmaceuticals Commo and XOMA Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on XOMA Corp and Eupraxia Pharmaceuticals 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 Eupraxia Pharmaceuticals Common are associated (or correlated) with XOMA Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of XOMA Corp has no effect on the direction of Eupraxia Pharmaceuticals i.e., Eupraxia Pharmaceuticals and XOMA Corp go up and down completely randomly.

Pair Corralation between Eupraxia Pharmaceuticals and XOMA Corp

Given the investment horizon of 90 days Eupraxia Pharmaceuticals Common is expected to generate 7.75 times more return on investment than XOMA Corp. However, Eupraxia Pharmaceuticals is 7.75 times more volatile than XOMA Corp. It trades about 0.1 of its potential returns per unit of risk. XOMA Corp is currently generating about -0.03 per unit of risk. If you would invest  249.00  in Eupraxia Pharmaceuticals Common on October 24, 2024 and sell it today you would earn a total of  68.00  from holding Eupraxia Pharmaceuticals Common or generate 27.31% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	98.33%
Values	Daily Returns

Eupraxia Pharmaceuticals Commo  vs.  XOMA Corp

Eupraxia Pharmaceuticals

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Eupraxia Pharmaceuticals Common are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of fairly fragile basic indicators, Eupraxia Pharmaceuticals showed solid returns over the last few months and may actually be approaching a breakup point.

XOMA Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days XOMA Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, XOMA Corp is not utilizing all of its potentials. The recent stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Eupraxia Pharmaceuticals and XOMA Corp

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

The idea behind Eupraxia Pharmaceuticals Common and XOMA Corp 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.