Correlation Between Eyepoint Pharmaceuticals and Ocuphire Pharma

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

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

Diversification Opportunities for Eyepoint Pharmaceuticals and Ocuphire Pharma

-0.3

Correlation Coefficient

Eyepoint Pharmaceuticals  Ocuphire Pharma

Very good diversification

The 3 months correlation between Eyepoint and Ocuphire is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding Eyepoint Pharmaceuticals and Ocuphire Pharma in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ocuphire Pharma 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 Ocuphire Pharma. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ocuphire Pharma has no effect on the direction of Eyepoint Pharmaceuticals i.e., Eyepoint Pharmaceuticals and Ocuphire Pharma go up and down completely randomly.

Pair Corralation between Eyepoint Pharmaceuticals and Ocuphire Pharma

Given the investment horizon of 90 days Eyepoint Pharmaceuticals is expected to generate 1.84 times more return on investment than Ocuphire Pharma. However, Eyepoint Pharmaceuticals is 1.84 times more volatile than Ocuphire Pharma. It trades about 0.02 of its potential returns per unit of risk. Ocuphire Pharma is currently generating about -0.19 per unit of risk. If you would invest  871.00  in Eyepoint Pharmaceuticals on September 5, 2024 and sell it today you would lose (22.00) from holding Eyepoint Pharmaceuticals or give up 2.53% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	35.71%
Values	Daily Returns

Eyepoint Pharmaceuticals  vs.  Ocuphire Pharma

Eyepoint Pharmaceuticals

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Eyepoint Pharmaceuticals are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, Eyepoint Pharmaceuticals unveiled solid returns over the last few months and may actually be approaching a breakup point.

Ocuphire Pharma

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Ocuphire Pharma has generated negative risk-adjusted returns adding no value to investors with long positions. Even with latest inconsistent performance, the Stock's basic indicators remain invariable and the latest agitation on Wall Street may also be a sign of long-running gains for the enterprise retail investors.

Pair Trading with Eyepoint Pharmaceuticals and Ocuphire Pharma

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

The idea behind Eyepoint Pharmaceuticals and Ocuphire Pharma 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.