Correlation Between Medicus Pharma and Ocular Therapeutix

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

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

Diversification Opportunities for Medicus Pharma and Ocular Therapeutix

-0.1

Correlation Coefficient

Medicus Pharma  Ocular Therapeutix

Good diversification

The 3 months correlation between Medicus and Ocular is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding Medicus Pharma Ltd and Ocular Therapeutix in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ocular Therapeutix and Medicus Pharma 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 Medicus Pharma Ltd 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 Medicus Pharma i.e., Medicus Pharma and Ocular Therapeutix go up and down completely randomly.

Pair Corralation between Medicus Pharma and Ocular Therapeutix

Given the investment horizon of 90 days Medicus Pharma Ltd is expected to generate 6.76 times more return on investment than Ocular Therapeutix. However, Medicus Pharma is 6.76 times more volatile than Ocular Therapeutix. It trades about 0.11 of its potential returns per unit of risk. Ocular Therapeutix is currently generating about 0.0 per unit of risk. If you would invest  172.00  in Medicus Pharma Ltd on October 24, 2024 and sell it today you would earn a total of  127.00  from holding Medicus Pharma Ltd or generate 73.84% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	67.9%
Values	Daily Returns

Medicus Pharma Ltd  vs.  Ocular Therapeutix

Medicus Pharma

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Medicus Pharma Ltd has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fragile performance in the last few months, the Stock's fundamental indicators remain fairly strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Ocular Therapeutix

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Ocular Therapeutix has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain quite persistent which may send shares a bit higher in February 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Pair Trading with Medicus Pharma and Ocular Therapeutix

The main advantage of trading using opposite Medicus Pharma and Ocular Therapeutix positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Medicus Pharma 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 Medicus Pharma Ltd 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.

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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.