Correlation Between Freeline Therapeutics and Opthea

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

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

Diversification Opportunities for Freeline Therapeutics and Opthea

-0.55

Correlation Coefficient

Freeline Therapeutics  Opthea

Excellent diversification

The 3 months correlation between Freeline and Opthea is -0.55. Overlapping area represents the amount of risk that can be diversified away by holding Freeline Therapeutics Holdings and Opthea in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Opthea and Freeline 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 Freeline Therapeutics Holdings 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 Freeline Therapeutics i.e., Freeline Therapeutics and Opthea go up and down completely randomly.

Pair Corralation between Freeline Therapeutics and Opthea

If you would invest  257.00  in Opthea on September 12, 2024 and sell it today you would earn a total of  92.00  from holding Opthea or generate 35.8% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	0.41%
Values	Daily Returns

Freeline Therapeutics Holdings  vs.  Opthea

Freeline Therapeutics

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Freeline Therapeutics Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy essential indicators, Freeline Therapeutics is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Opthea

Risk-Adjusted Performance

4 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Opthea are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unfluctuating basic indicators, Opthea unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Freeline Therapeutics and Opthea

The main advantage of trading using opposite Freeline Therapeutics and Opthea positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Freeline Therapeutics 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 Freeline Therapeutics Holdings 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.