Correlation Between Eyepoint Pharmaceuticals and GeoVax Labs

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

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

Diversification Opportunities for Eyepoint Pharmaceuticals and GeoVax Labs

-0.42

Correlation Coefficient

Eyepoint Pharmaceuticals  GeoVax Labs

Very good diversification

The 3 months correlation between Eyepoint and GeoVax is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding Eyepoint Pharmaceuticals and GeoVax Labs in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GeoVax Labs and Eyepoint 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 Eyepoint Pharmaceuticals are associated (or correlated) with GeoVax Labs. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GeoVax Labs has no effect on the direction of Eyepoint Pharmaceuticals i.e., Eyepoint Pharmaceuticals and GeoVax Labs go up and down completely randomly.

Pair Corralation between Eyepoint Pharmaceuticals and GeoVax Labs

Given the investment horizon of 90 days Eyepoint Pharmaceuticals is expected to under-perform the GeoVax Labs. But the stock apears to be less risky and, when comparing its historical volatility, Eyepoint Pharmaceuticals is 1.8 times less risky than GeoVax Labs. The stock trades about -0.3 of its potential returns per unit of risk. The GeoVax Labs is currently generating about -0.09 of returns per unit of risk over similar time horizon. If you would invest  314.00  in GeoVax Labs on September 12, 2024 and sell it today you would lose (70.00) from holding GeoVax Labs or give up 22.29% of portfolio value over 90 days.

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

Eyepoint Pharmaceuticals  vs.  GeoVax Labs

Eyepoint Pharmaceuticals

Risk-Adjusted Performance

0 of 100

Weak

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

GeoVax Labs

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Eyepoint Pharmaceuticals and GeoVax Labs

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

The idea behind Eyepoint Pharmaceuticals and GeoVax Labs 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.

Check out your portfolio center.

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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.