Correlation Between Fulcrum Therapeutics and Ocular Therapeutix

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

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

Diversification Opportunities for Fulcrum Therapeutics and Ocular Therapeutix

-0.45

Correlation Coefficient

Fulcrum Therapeutics  Ocular Therapeutix

Very good diversification

The 3 months correlation between Fulcrum and Ocular is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding Fulcrum Therapeutics and Ocular Therapeutix in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ocular Therapeutix and Fulcrum 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 Fulcrum Therapeutics are associated (or correlated) with Ocular Therapeutix. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ocular Therapeutix has no effect on the direction of Fulcrum Therapeutics i.e., Fulcrum Therapeutics and Ocular Therapeutix go up and down completely randomly.

Pair Corralation between Fulcrum Therapeutics and Ocular Therapeutix

Given the investment horizon of 90 days Fulcrum Therapeutics is expected to under-perform the Ocular Therapeutix. In addition to that, Fulcrum Therapeutics is 2.59 times more volatile than Ocular Therapeutix. It trades about -0.06 of its total potential returns per unit of risk. Ocular Therapeutix is currently generating about 0.08 per unit of volatility. If you would invest  843.00  in Ocular Therapeutix on September 4, 2024 and sell it today you would earn a total of  134.00  from holding Ocular Therapeutix or generate 15.9% return on investment over 90 days.

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

Fulcrum Therapeutics  vs.  Ocular Therapeutix

Fulcrum Therapeutics

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Fulcrum 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 essential indicators remain rather sound which may send shares a bit higher in January 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Ocular Therapeutix

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Ocular Therapeutix are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite quite weak basic indicators, Ocular Therapeutix disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Fulcrum Therapeutics and Ocular Therapeutix

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

The idea behind Fulcrum Therapeutics and Ocular Therapeutix 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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.