Correlation Between Mustang Bio and OCUP Old

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

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

Diversification Opportunities for Mustang Bio and OCUP Old

-0.02

Correlation Coefficient

Mustang Bio  OCUP Old

Good diversification

The 3 months correlation between Mustang and OCUP is -0.02. Overlapping area represents the amount of risk that can be diversified away by holding Mustang Bio and OCUP Old in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on OCUP Old and Mustang Bio 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 Mustang Bio are associated (or correlated) with OCUP Old. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of OCUP Old has no effect on the direction of Mustang Bio i.e., Mustang Bio and OCUP Old go up and down completely randomly.

Pair Corralation between Mustang Bio and OCUP Old

Given the investment horizon of 90 days Mustang Bio is expected to generate 1.6 times more return on investment than OCUP Old. However, Mustang Bio is 1.6 times more volatile than OCUP Old. It trades about 0.04 of its potential returns per unit of risk. OCUP Old is currently generating about -0.23 per unit of risk. If you would invest  21.00  in Mustang Bio on October 8, 2024 and sell it today you would earn a total of  1.00  from holding Mustang Bio or generate 4.76% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	22.58%
Values	Daily Returns

Mustang Bio  vs.  OCUP Old

Mustang Bio

Risk-Adjusted Performance

3 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Mustang Bio are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of very uncertain forward indicators, Mustang Bio displayed solid returns over the last few months and may actually be approaching a breakup point.

OCUP Old

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days OCUP Old has generated negative risk-adjusted returns adding no value to investors with long positions. Even with inconsistent performance in the last few months, the Stock's basic indicators remain relatively invariable which may send shares a bit higher in February 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Pair Trading with Mustang Bio and OCUP Old

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

The idea behind Mustang Bio and OCUP Old 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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.