Correlation Between OKYO Pharma and Scisparc

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

Diversification Opportunities for OKYO Pharma and Scisparc

-0.04

Correlation Coefficient

OKYO Pharma  Scisparc

Good diversification

The 3 months correlation between OKYO and Scisparc is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding OKYO Pharma Ltd and Scisparc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Scisparc 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 Scisparc. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Scisparc has no effect on the direction of OKYO Pharma i.e., OKYO Pharma and Scisparc go up and down completely randomly.

Pair Corralation between OKYO Pharma and Scisparc

Given the investment horizon of 90 days OKYO Pharma Ltd is expected to generate 0.9 times more return on investment than Scisparc. However, OKYO Pharma Ltd is 1.11 times less risky than Scisparc. It trades about 0.02 of its potential returns per unit of risk. Scisparc is currently generating about -0.13 per unit of risk. If you would invest  116.00  in OKYO Pharma Ltd on September 23, 2024 and sell it today you would lose (10.00) from holding OKYO Pharma Ltd or give up 8.62% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

OKYO Pharma Ltd  vs.  Scisparc

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 fragile basic indicators, OKYO Pharma may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Scisparc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Scisparc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unsteady performance, the Stock's basic indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Pair Trading with OKYO Pharma and Scisparc

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

The idea behind OKYO Pharma Ltd and Scisparc 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.