Correlation Between OKYO Pharma and Awakn Life

Can any of the company-specific risk be diversified away by investing in both OKYO Pharma and Awakn Life 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 Awakn Life 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 Awakn Life Sciences, you can compare the effects of market volatilities on OKYO Pharma and Awakn Life 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 Awakn Life. Check out your portfolio center. Please also check ongoing floating volatility patterns of OKYO Pharma and Awakn Life.

Diversification Opportunities for OKYO Pharma and Awakn Life

0.35

Correlation Coefficient

OKYO Pharma  Awakn Life

Weak diversification

The 3 months correlation between OKYO and Awakn is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding OKYO Pharma Ltd and Awakn Life Sciences in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Awakn Life Sciences 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 Awakn Life. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Awakn Life Sciences has no effect on the direction of OKYO Pharma i.e., OKYO Pharma and Awakn Life go up and down completely randomly.

Pair Corralation between OKYO Pharma and Awakn Life

Given the investment horizon of 90 days OKYO Pharma Ltd is expected to under-perform the Awakn Life. But the stock apears to be less risky and, when comparing its historical volatility, OKYO Pharma Ltd is 2.42 times less risky than Awakn Life. The stock trades about -0.01 of its potential returns per unit of risk. The Awakn Life Sciences is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  11.00  in Awakn Life Sciences on September 24, 2024 and sell it today you would lose (4.50) from holding Awakn Life Sciences or give up 40.91% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

OKYO Pharma Ltd  vs.  Awakn Life Sciences

OKYO Pharma

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in OKYO Pharma Ltd are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of very unsteady basic indicators, OKYO Pharma may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Awakn Life Sciences

Risk-Adjusted Performance

5 of 100

Insignificant

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

Pair Trading with OKYO Pharma and Awakn Life

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

The idea behind OKYO Pharma Ltd and Awakn Life Sciences 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.