Correlation Between Onconova Therapeutics and Moleculin Biotech

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

By analyzing existing cross correlation between Onconova Therapeutics and Moleculin Biotech, you can compare the effects of market volatilities on Onconova Therapeutics and Moleculin Biotech 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 Moleculin Biotech. Check out your portfolio center. Please also check ongoing floating volatility patterns of Onconova Therapeutics and Moleculin Biotech.

Diversification Opportunities for Onconova Therapeutics and Moleculin Biotech

0.21

Correlation Coefficient

Onconova Therapeutics  Moleculin Biotech

Modest diversification

The 3 months correlation between Onconova and Moleculin is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding Onconova Therapeutics and Moleculin Biotech in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Moleculin Biotech 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 Moleculin Biotech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Moleculin Biotech has no effect on the direction of Onconova Therapeutics i.e., Onconova Therapeutics and Moleculin Biotech go up and down completely randomly.

Pair Corralation between Onconova Therapeutics and Moleculin Biotech

Given the investment horizon of 90 days Onconova Therapeutics is expected to generate 1.37 times more return on investment than Moleculin Biotech. However, Onconova Therapeutics is 1.37 times more volatile than Moleculin Biotech. It trades about 0.08 of its potential returns per unit of risk. Moleculin Biotech is currently generating about -0.05 per unit of risk. If you would invest  63.00  in Onconova Therapeutics on September 18, 2024 and sell it today you would earn a total of  39.00  from holding Onconova Therapeutics or generate 61.9% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	28.89%
Values	Daily Returns

Onconova Therapeutics  vs.  Moleculin Biotech

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.

Moleculin Biotech

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Onconova Therapeutics and Moleculin Biotech

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

The idea behind Onconova Therapeutics and Moleculin Biotech 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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.