Correlation Between Opthea and Bright Minds

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

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

Diversification Opportunities for Opthea and Bright Minds

0.23

Correlation Coefficient

Opthea  Bright Minds

Modest diversification

The 3 months correlation between Opthea and Bright is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding Opthea 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 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 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 Opthea i.e., Opthea and Bright Minds go up and down completely randomly.

Pair Corralation between Opthea and Bright Minds

Considering the 90-day investment horizon Opthea is expected to generate 22.38 times less return on investment than Bright Minds. In addition to that, Opthea is 1.34 times more volatile than Bright Minds Biosciences. It trades about 0.0 of its total potential returns per unit of risk. Bright Minds Biosciences is currently generating about 0.02 per unit of volatility. If you would invest  3,686  in Bright Minds Biosciences on December 28, 2024 and sell it today you would lose (36.00) from holding Bright Minds Biosciences or give up 0.98% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	88.52%
Values	Daily Returns

Opthea  vs.  Bright Minds Biosciences

Opthea

Risk-Adjusted Performance

Very Weak

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

Bright Minds Biosciences

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Bright Minds Biosciences are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak basic indicators, Bright Minds may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Opthea and Bright Minds

The main advantage of trading using opposite Opthea and Bright Minds positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Opthea 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 Opthea 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.