Correlation Between Opthea and ALRN Old

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

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

Diversification Opportunities for Opthea and ALRN Old

0.0

Correlation Coefficient

Opthea  ALRN Old

Pay attention - limited upside

The 3 months correlation between Opthea and ALRN is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Opthea and ALRN Old in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ALRN Old and Opthea 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 Opthea are associated (or correlated) with ALRN Old. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ALRN Old has no effect on the direction of Opthea i.e., Opthea and ALRN Old go up and down completely randomly.

Pair Corralation between Opthea and ALRN Old

If you would invest  377.00  in Opthea on December 3, 2024 and sell it today you would earn a total of  71.00  from holding Opthea or generate 18.83% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Opthea  vs.  ALRN Old

Opthea

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Opthea are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unfluctuating basic indicators, Opthea unveiled solid returns over the last few months and may actually be approaching a breakup point.

ALRN Old

Risk-Adjusted Performance

Very Weak

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

Pair Trading with Opthea and ALRN Old

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

The idea behind Opthea and ALRN Old 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 Global Correlations module to find global opportunities by holding instruments from different markets.