Correlation Between Oxford Nanopore and Innovent Biologics

Can any of the company-specific risk be diversified away by investing in both Oxford Nanopore and Innovent Biologics 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 Oxford Nanopore and Innovent Biologics into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Oxford Nanopore Technologies and Innovent Biologics, you can compare the effects of market volatilities on Oxford Nanopore and Innovent Biologics 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 Oxford Nanopore with a short position of Innovent Biologics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Oxford Nanopore and Innovent Biologics.

Diversification Opportunities for Oxford Nanopore and Innovent Biologics

0.3

Correlation Coefficient

Oxford Nanopore  Innovent Biologics

Weak diversification

The 3 months correlation between Oxford and Innovent is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding Oxford Nanopore Technologies and Innovent Biologics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Innovent Biologics and Oxford Nanopore 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 Oxford Nanopore Technologies are associated (or correlated) with Innovent Biologics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Innovent Biologics has no effect on the direction of Oxford Nanopore i.e., Oxford Nanopore and Innovent Biologics go up and down completely randomly.

Pair Corralation between Oxford Nanopore and Innovent Biologics

Assuming the 90 days horizon Oxford Nanopore Technologies is expected to generate 1.53 times more return on investment than Innovent Biologics. However, Oxford Nanopore is 1.53 times more volatile than Innovent Biologics. It trades about 0.02 of its potential returns per unit of risk. Innovent Biologics is currently generating about -0.14 per unit of risk. If you would invest  194.00  in Oxford Nanopore Technologies on October 22, 2024 and sell it today you would lose (4.00) from holding Oxford Nanopore Technologies or give up 2.06% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	95.31%
Values	Daily Returns

Oxford Nanopore Technologies  vs.  Innovent Biologics

Oxford Nanopore Tech

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Oxford Nanopore Technologies are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak basic indicators, Oxford Nanopore may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Innovent Biologics

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Innovent Biologics has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Oxford Nanopore and Innovent Biologics

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

The idea behind Oxford Nanopore Technologies and Innovent Biologics 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.