Correlation Between Khiron Life and Ovation Science

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

By analyzing existing cross correlation between Khiron Life Sciences and Ovation Science, you can compare the effects of market volatilities on Khiron Life and Ovation Science 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 Khiron Life with a short position of Ovation Science. Check out your portfolio center. Please also check ongoing floating volatility patterns of Khiron Life and Ovation Science.

Diversification Opportunities for Khiron Life and Ovation Science

-0.23

Correlation Coefficient

Khiron Life  Ovation Science

Very good diversification

The 3 months correlation between Khiron and Ovation is -0.23. Overlapping area represents the amount of risk that can be diversified away by holding Khiron Life Sciences and Ovation Science in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ovation Science and Khiron Life 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 Khiron Life Sciences are associated (or correlated) with Ovation Science. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ovation Science has no effect on the direction of Khiron Life i.e., Khiron Life and Ovation Science go up and down completely randomly.

Pair Corralation between Khiron Life and Ovation Science

Assuming the 90 days horizon Khiron Life Sciences is expected to generate 4.82 times more return on investment than Ovation Science. However, Khiron Life is 4.82 times more volatile than Ovation Science. It trades about 0.08 of its potential returns per unit of risk. Ovation Science is currently generating about 0.05 per unit of risk. If you would invest  1.40  in Khiron Life Sciences on October 24, 2024 and sell it today you would lose (1.39) from holding Khiron Life Sciences or give up 99.29% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.8%
Values	Daily Returns

Khiron Life Sciences  vs.  Ovation Science

Khiron Life Sciences

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Khiron Life Sciences has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Khiron Life is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Ovation Science

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Ovation Science are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Ovation Science reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Khiron Life and Ovation Science

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

The idea behind Khiron Life Sciences and Ovation Science 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 Global Correlations module to find global opportunities by holding instruments from different markets.