Correlation Between Nkarta and Opthea

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

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

Diversification Opportunities for Nkarta and Opthea

-0.13

Correlation Coefficient

Nkarta  Opthea

Good diversification

The 3 months correlation between Nkarta and Opthea is -0.13. Overlapping area represents the amount of risk that can be diversified away by holding Nkarta Inc and Opthea in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Opthea and Nkarta 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 Nkarta Inc are associated (or correlated) with Opthea. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Opthea has no effect on the direction of Nkarta i.e., Nkarta and Opthea go up and down completely randomly.

Pair Corralation between Nkarta and Opthea

Given the investment horizon of 90 days Nkarta Inc is expected to under-perform the Opthea. In addition to that, Nkarta is 1.05 times more volatile than Opthea. It trades about -0.01 of its total potential returns per unit of risk. Opthea is currently generating about 0.0 per unit of volatility. If you would invest  387.00  in Opthea on December 29, 2024 and sell it today you would lose (46.00) from holding Opthea or give up 11.89% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	86.89%
Values	Daily Returns

Nkarta Inc  vs.  Opthea

Nkarta Inc

Risk-Adjusted Performance

Very Weak

Over the last 90 days Nkarta Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, Nkarta is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Opthea

Risk-Adjusted Performance

Very Weak

Over the last 90 days Opthea has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Opthea is not utilizing all of its potentials. The recent stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Nkarta and Opthea

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

The idea behind Nkarta Inc and Opthea 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.