Correlation Between Opthea and Collplant Biotechnologies

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

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

Diversification Opportunities for Opthea and Collplant Biotechnologies

-0.4

Correlation Coefficient

Opthea  Collplant Biotechnologies

Very good diversification

The 3 months correlation between Opthea and Collplant is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding Opthea and Collplant Biotechnologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Collplant Biotechnologies 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 Collplant Biotechnologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Collplant Biotechnologies has no effect on the direction of Opthea i.e., Opthea and Collplant Biotechnologies go up and down completely randomly.

Pair Corralation between Opthea and Collplant Biotechnologies

Considering the 90-day investment horizon Opthea is expected to generate 1.16 times more return on investment than Collplant Biotechnologies. However, Opthea is 1.16 times more volatile than Collplant Biotechnologies. It trades about 0.03 of its potential returns per unit of risk. Collplant Biotechnologies is currently generating about -0.04 per unit of risk. If you would invest  453.00  in Opthea on November 19, 2024 and sell it today you would earn a total of  68.00  from holding Opthea or generate 15.01% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	97.98%
Values	Daily Returns

Opthea  vs.  Collplant Biotechnologies

Opthea

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Opthea are ranked lower than 15 (%) 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.

Collplant Biotechnologies

Risk-Adjusted Performance

Very Weak

Over the last 90 days Collplant Biotechnologies has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's technical and fundamental indicators remain very healthy which may send shares a bit higher in March 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with Opthea and Collplant Biotechnologies

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

The idea behind Opthea and Collplant Biotechnologies 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.