Correlation Between OCUP Old and Mustang Bio

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

By analyzing existing cross correlation between OCUP Old and Mustang Bio, you can compare the effects of market volatilities on OCUP Old and Mustang Bio 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 Mustang Bio. Check out your portfolio center. Please also check ongoing floating volatility patterns of OCUP Old and Mustang Bio.

Diversification Opportunities for OCUP Old and Mustang Bio

-0.02

Correlation Coefficient

OCUP Old  Mustang Bio

Good diversification

The 3 months correlation between OCUP and Mustang is -0.02. Overlapping area represents the amount of risk that can be diversified away by holding OCUP Old and Mustang Bio in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mustang Bio 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 Mustang Bio. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mustang Bio has no effect on the direction of OCUP Old i.e., OCUP Old and Mustang Bio go up and down completely randomly.

Pair Corralation between OCUP Old and Mustang Bio

Given the investment horizon of 90 days OCUP Old is expected to under-perform the Mustang Bio. But the stock apears to be less risky and, when comparing its historical volatility, OCUP Old is 1.6 times less risky than Mustang Bio. The stock trades about -0.23 of its potential returns per unit of risk. The Mustang Bio is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  21.00  in Mustang Bio on October 8, 2024 and sell it today you would earn a total of  1.00  from holding Mustang Bio or generate 4.76% return on investment over 90 days.

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

OCUP Old  vs.  Mustang Bio

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.

Mustang Bio

Risk-Adjusted Performance

3 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Mustang Bio are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of very uncertain forward indicators, Mustang Bio displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with OCUP Old and Mustang Bio

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

The idea behind OCUP Old and Mustang Bio 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.