Correlation Between Onconova Therapeutics and Bright Minds

Can any of the company-specific risk be diversified away by investing in both Onconova Therapeutics and Bright Minds 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 Onconova Therapeutics and Bright Minds into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Onconova Therapeutics and Bright Minds Biosciences, you can compare the effects of market volatilities on Onconova Therapeutics and Bright Minds 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 Onconova Therapeutics with a short position of Bright Minds. Check out your portfolio center. Please also check ongoing floating volatility patterns of Onconova Therapeutics and Bright Minds.

Diversification Opportunities for Onconova Therapeutics and Bright Minds

-0.23

Correlation Coefficient

Onconova Therapeutics  Bright Minds

Very good diversification

The 3 months correlation between Onconova and Bright is -0.23. Overlapping area represents the amount of risk that can be diversified away by holding Onconova Therapeutics and Bright Minds Biosciences in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bright Minds Biosciences and Onconova Therapeutics 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 Onconova Therapeutics are associated (or correlated) with Bright Minds. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bright Minds Biosciences has no effect on the direction of Onconova Therapeutics i.e., Onconova Therapeutics and Bright Minds go up and down completely randomly.

Pair Corralation between Onconova Therapeutics and Bright Minds

If you would invest  102.00  in Onconova Therapeutics on August 31, 2024 and sell it today you would earn a total of  0.00  from holding Onconova Therapeutics or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	4.55%
Values	Daily Returns

Onconova Therapeutics  vs.  Bright Minds Biosciences

Onconova Therapeutics

Risk-Adjusted Performance

0 of 100

Very Weak

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

Bright Minds Biosciences

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Bright Minds Biosciences are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite nearly unsteady basic indicators, Bright Minds reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Onconova Therapeutics and Bright Minds

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

The idea behind Onconova Therapeutics and Bright Minds Biosciences 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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.