Correlation Between Ideaya Biosciences and OmniAb

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

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

Diversification Opportunities for Ideaya Biosciences and OmniAb

0.72

Correlation Coefficient

Ideaya Biosciences  OmniAb

Poor diversification

The 3 months correlation between Ideaya and OmniAb is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Ideaya Biosciences and OmniAb Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on OmniAb Inc and Ideaya Biosciences 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 Ideaya Biosciences are associated (or correlated) with OmniAb. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of OmniAb Inc has no effect on the direction of Ideaya Biosciences i.e., Ideaya Biosciences and OmniAb go up and down completely randomly.

Pair Corralation between Ideaya Biosciences and OmniAb

Given the investment horizon of 90 days Ideaya Biosciences is expected to under-perform the OmniAb. But the stock apears to be less risky and, when comparing its historical volatility, Ideaya Biosciences is 1.07 times less risky than OmniAb. The stock trades about -0.07 of its potential returns per unit of risk. The OmniAb Inc is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest  388.00  in OmniAb Inc on September 16, 2024 and sell it today you would lose (9.00) from holding OmniAb Inc or give up 2.32% of portfolio value over 90 days.

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

Ideaya Biosciences  vs.  OmniAb Inc

Ideaya Biosciences

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Ideaya Biosciences has generated negative risk-adjusted returns adding no value to investors with long positions. Despite inconsistent performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

OmniAb Inc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days OmniAb Inc has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unfluctuating performance in the last few months, the Stock's fundamental drivers remain fairly strong which may send shares a bit higher in January 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Pair Trading with Ideaya Biosciences and OmniAb

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

The idea behind Ideaya Biosciences and OmniAb Inc 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.