Correlation Between 4D Molecular and Opthea

Can any of the company-specific risk be diversified away by investing in both 4D Molecular and Opthea 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 4D Molecular and Opthea into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between 4D Molecular Therapeutics and Opthea, you can compare the effects of market volatilities on 4D Molecular and Opthea 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 4D Molecular with a short position of Opthea. Check out your portfolio center. Please also check ongoing floating volatility patterns of 4D Molecular and Opthea.

Diversification Opportunities for 4D Molecular and Opthea

-0.07

Correlation Coefficient

4D Molecular  Opthea

Good diversification

The 3 months correlation between FDMT and Opthea is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding 4D Molecular Therapeutics and Opthea in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Opthea and 4D Molecular 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 4D Molecular Therapeutics are associated (or correlated) with Opthea. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Opthea has no effect on the direction of 4D Molecular i.e., 4D Molecular and Opthea go up and down completely randomly.

Pair Corralation between 4D Molecular and Opthea

Given the investment horizon of 90 days 4D Molecular Therapeutics is expected to under-perform the Opthea. But the stock apears to be less risky and, when comparing its historical volatility, 4D Molecular Therapeutics is 1.29 times less risky than Opthea. The stock trades about -0.1 of its potential returns per unit of risk. The Opthea is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest  387.00  in Opthea on December 28, 2024 and sell it today you would lose (46.00) from holding Opthea or give up 11.89% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	88.33%
Values	Daily Returns

4D Molecular Therapeutics  vs.  Opthea

4D Molecular Therapeutics

Risk-Adjusted Performance

Very Weak

Over the last 90 days 4D Molecular Therapeutics has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's primary indicators remain comparatively stable which may send shares a bit higher in April 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Opthea

Risk-Adjusted Performance

Very Weak

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

Pair Trading with 4D Molecular and Opthea

The main advantage of trading using opposite 4D Molecular and Opthea positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if 4D Molecular position performs unexpectedly, Opthea 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 Opthea will offset losses from the drop in Opthea's long position.

The idea behind 4D Molecular Therapeutics and Opthea 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..