Correlation Between ONTX Old and Aridis Pharmaceuticals

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

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

Diversification Opportunities for ONTX Old and Aridis Pharmaceuticals

-0.29

Correlation Coefficient

ONTX Old  Aridis Pharmaceuticals

Very good diversification

The 3 months correlation between ONTX and Aridis is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding ONTX Old and Aridis Pharmaceuticals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aridis Pharmaceuticals and ONTX 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 ONTX Old are associated (or correlated) with Aridis Pharmaceuticals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aridis Pharmaceuticals has no effect on the direction of ONTX Old i.e., ONTX Old and Aridis Pharmaceuticals go up and down completely randomly.

Pair Corralation between ONTX Old and Aridis Pharmaceuticals

Given the investment horizon of 90 days ONTX Old is expected to generate 0.59 times more return on investment than Aridis Pharmaceuticals. However, ONTX Old is 1.7 times less risky than Aridis Pharmaceuticals. It trades about 0.05 of its potential returns per unit of risk. Aridis Pharmaceuticals is currently generating about -0.04 per unit of risk. If you would invest  86.00  in ONTX Old on October 10, 2024 and sell it today you would earn a total of  16.00  from holding ONTX Old or generate 18.6% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	97.67%
Values	Daily Returns

ONTX Old  vs.  Aridis Pharmaceuticals

ONTX Old

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ONTX Old has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, ONTX Old is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Aridis Pharmaceuticals

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Aridis Pharmaceuticals has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable fundamental indicators, Aridis Pharmaceuticals is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with ONTX Old and Aridis Pharmaceuticals

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

The idea behind ONTX Old and Aridis 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.

Check out your portfolio center.

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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.