Correlation Between OKYO Pharma and Algernon Pharmaceuticals

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

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

Diversification Opportunities for OKYO Pharma and Algernon Pharmaceuticals

0.14

Correlation Coefficient

OKYO Pharma  Algernon Pharmaceuticals

Average diversification

The 3 months correlation between OKYO and Algernon is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding OKYO Pharma Ltd and Algernon Pharmaceuticals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Algernon Pharmaceuticals and OKYO Pharma 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 OKYO Pharma Ltd are associated (or correlated) with Algernon Pharmaceuticals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Algernon Pharmaceuticals has no effect on the direction of OKYO Pharma i.e., OKYO Pharma and Algernon Pharmaceuticals go up and down completely randomly.

Pair Corralation between OKYO Pharma and Algernon Pharmaceuticals

Given the investment horizon of 90 days OKYO Pharma Ltd is expected to generate 0.73 times more return on investment than Algernon Pharmaceuticals. However, OKYO Pharma Ltd is 1.38 times less risky than Algernon Pharmaceuticals. It trades about 0.02 of its potential returns per unit of risk. Algernon Pharmaceuticals is currently generating about 0.01 per unit of risk. If you would invest  226.00  in OKYO Pharma Ltd on October 12, 2024 and sell it today you would lose (97.00) from holding OKYO Pharma Ltd or give up 42.92% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	99.6%
Values	Daily Returns

OKYO Pharma Ltd  vs.  Algernon Pharmaceuticals

OKYO Pharma

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in OKYO Pharma Ltd are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of very fragile basic indicators, OKYO Pharma displayed solid returns over the last few months and may actually be approaching a breakup point.

Algernon Pharmaceuticals

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Algernon Pharmaceuticals are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Algernon Pharmaceuticals reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with OKYO Pharma and Algernon Pharmaceuticals

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

The idea behind OKYO Pharma Ltd and Algernon 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.

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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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.