Correlation Between Harrow Health and XOMA

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

By analyzing existing cross correlation between Harrow Health 8625 and XOMA Corporation, you can compare the effects of market volatilities on Harrow Health and XOMA 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 Harrow Health with a short position of XOMA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Harrow Health and XOMA.

Diversification Opportunities for Harrow Health and XOMA

0.74

Correlation Coefficient

Harrow Health  XOMA

Poor diversification

The 3 months correlation between Harrow and XOMA is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Harrow Health 8625 and XOMA Corp. in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on XOMA and Harrow Health 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 Harrow Health 8625 are associated (or correlated) with XOMA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of XOMA has no effect on the direction of Harrow Health i.e., Harrow Health and XOMA go up and down completely randomly.

Pair Corralation between Harrow Health and XOMA

Assuming the 90 days horizon Harrow Health 8625 is expected to generate 1.69 times more return on investment than XOMA. However, Harrow Health is 1.69 times more volatile than XOMA Corporation. It trades about -0.03 of its potential returns per unit of risk. XOMA Corporation is currently generating about -0.21 per unit of risk. If you would invest  2,545  in Harrow Health 8625 on September 1, 2024 and sell it today you would lose (6.00) from holding Harrow Health 8625 or give up 0.24% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

Harrow Health 8625  vs.  XOMA Corp.

Harrow Health 8625

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Harrow Health 8625 are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent basic indicators, Harrow Health is not utilizing all of its potentials. The recent stock price mess, may contribute to short-term losses for the institutional investors.

XOMA

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in XOMA Corporation are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, XOMA is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Harrow Health and XOMA

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

The idea behind Harrow Health 8625 and XOMA Corporation 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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.