Correlation Between Ocular Therapeutix and Renalytix

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

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

Diversification Opportunities for Ocular Therapeutix and Renalytix

-0.7

Correlation Coefficient

Ocular Therapeutix  Renalytix

Excellent diversification

The 3 months correlation between Ocular and Renalytix is -0.7. Overlapping area represents the amount of risk that can be diversified away by holding Ocular Therapeutix and Renalytix AI in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Renalytix AI and Ocular Therapeutix 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 Ocular Therapeutix are associated (or correlated) with Renalytix. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Renalytix AI has no effect on the direction of Ocular Therapeutix i.e., Ocular Therapeutix and Renalytix go up and down completely randomly.

Pair Corralation between Ocular Therapeutix and Renalytix

Given the investment horizon of 90 days Ocular Therapeutix is expected to generate 0.54 times more return on investment than Renalytix. However, Ocular Therapeutix is 1.85 times less risky than Renalytix. It trades about 0.07 of its potential returns per unit of risk. Renalytix AI is currently generating about -0.16 per unit of risk. If you would invest  844.00  in Ocular Therapeutix on September 5, 2024 and sell it today you would earn a total of  105.00  from holding Ocular Therapeutix or generate 12.44% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	98.44%
Values	Daily Returns

Ocular Therapeutix  vs.  Renalytix AI

Ocular Therapeutix

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Ocular Therapeutix are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite quite weak basic indicators, Ocular Therapeutix disclosed solid returns over the last few months and may actually be approaching a breakup point.

Renalytix AI

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Ocular Therapeutix and Renalytix

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

The idea behind Ocular Therapeutix and Renalytix AI 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.