Correlation Between Neutra Corp and Onconova Therapeutics

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

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

Diversification Opportunities for Neutra Corp and Onconova Therapeutics

-0.26

Correlation Coefficient

Neutra Corp  Onconova Therapeutics

Very good diversification

The 3 months correlation between Neutra and Onconova is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding Neutra Corp and Onconova Therapeutics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Onconova Therapeutics and Neutra Corp 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 Neutra Corp are associated (or correlated) with Onconova Therapeutics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Onconova Therapeutics has no effect on the direction of Neutra Corp i.e., Neutra Corp and Onconova Therapeutics go up and down completely randomly.

Pair Corralation between Neutra Corp and Onconova Therapeutics

If you would invest  0.01  in Neutra Corp on September 30, 2024 and sell it today you would earn a total of  0.01  from holding Neutra Corp or generate 100.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	1.54%
Values	Daily Returns

Neutra Corp  vs.  Onconova Therapeutics

Neutra Corp

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Neutra Corp are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Even with relatively fragile basic indicators, Neutra Corp reported solid returns over the last few months and may actually be approaching a breakup point.

Onconova Therapeutics

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Neutra Corp and Onconova Therapeutics

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

The idea behind Neutra Corp and Onconova Therapeutics 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.