Correlation Between Ocugen and Adial Pharmaceuticals

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

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

Diversification Opportunities for Ocugen and Adial Pharmaceuticals

-0.26

Correlation Coefficient

Ocugen  Adial Pharmaceuticals

Very good diversification

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

Pair Corralation between Ocugen and Adial Pharmaceuticals

Given the investment horizon of 90 days Ocugen Inc is expected to generate 1.73 times more return on investment than Adial Pharmaceuticals. However, Ocugen is 1.73 times more volatile than Adial Pharmaceuticals. It trades about -0.03 of its potential returns per unit of risk. Adial Pharmaceuticals is currently generating about -0.22 per unit of risk. If you would invest  88.00  in Ocugen Inc on October 11, 2024 and sell it today you would lose (5.00) from holding Ocugen Inc or give up 5.68% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Ocugen Inc  vs.  Adial Pharmaceuticals

Ocugen Inc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Ocugen Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's technical and fundamental indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Adial Pharmaceuticals

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Adial Pharmaceuticals are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite quite weak forward indicators, Adial Pharmaceuticals disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Ocugen and Adial Pharmaceuticals

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

The idea behind Ocugen Inc and Adial 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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.