Correlation Between OmniAb and InMed Pharmaceuticals

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

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

Diversification Opportunities for OmniAb and InMed Pharmaceuticals

0.26

Correlation Coefficient

OmniAb  InMed Pharmaceuticals

Modest diversification

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

Pair Corralation between OmniAb and InMed Pharmaceuticals

Given the investment horizon of 90 days OmniAb Inc is expected to under-perform the InMed Pharmaceuticals. But the stock apears to be less risky and, when comparing its historical volatility, OmniAb Inc is 2.02 times less risky than InMed Pharmaceuticals. The stock trades about -0.19 of its potential returns per unit of risk. The InMed Pharmaceuticals is currently generating about 0.23 of returns per unit of risk over similar time horizon. If you would invest  414.00  in InMed Pharmaceuticals on October 20, 2024 and sell it today you would earn a total of  81.00  from holding InMed Pharmaceuticals or generate 19.57% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

OmniAb Inc  vs.  InMed Pharmaceuticals

OmniAb Inc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days OmniAb Inc has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unfluctuating performance in the last few months, the Stock's fundamental drivers remain fairly strong which may send shares a bit higher in February 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

InMed Pharmaceuticals

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with OmniAb and InMed Pharmaceuticals

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

The idea behind OmniAb Inc and InMed Pharmaceuticals 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.