Correlation Between OCUP Old and Fortress Biotech

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

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

Diversification Opportunities for OCUP Old and Fortress Biotech

-0.45

Correlation Coefficient

OCUP Old  Fortress Biotech

Very good diversification

The 3 months correlation between OCUP and Fortress is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding OCUP Old and Fortress Biotech Pref in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fortress Biotech Pref and OCUP Old 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 OCUP Old are associated (or correlated) with Fortress Biotech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fortress Biotech Pref has no effect on the direction of OCUP Old i.e., OCUP Old and Fortress Biotech go up and down completely randomly.

Pair Corralation between OCUP Old and Fortress Biotech

Given the investment horizon of 90 days OCUP Old is expected to under-perform the Fortress Biotech. But the stock apears to be less risky and, when comparing its historical volatility, OCUP Old is 1.1 times less risky than Fortress Biotech. The stock trades about -0.23 of its potential returns per unit of risk. The Fortress Biotech Pref is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest  505.00  in Fortress Biotech Pref on October 8, 2024 and sell it today you would earn a total of  193.00  from holding Fortress Biotech Pref or generate 38.22% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	22.58%
Values	Daily Returns

OCUP Old  vs.  Fortress Biotech Pref

OCUP Old

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days OCUP Old has generated negative risk-adjusted returns adding no value to investors with long positions. Even with inconsistent performance in the last few months, the Stock's basic indicators remain relatively invariable which may send shares a bit higher in February 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Fortress Biotech Pref

Risk-Adjusted Performance

11 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Fortress Biotech Pref are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Fortress Biotech reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with OCUP Old and Fortress Biotech

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

The idea behind OCUP Old and Fortress Biotech Pref 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.