Correlation Between Opthea and Janux Therapeutics

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

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

Diversification Opportunities for Opthea and Janux Therapeutics

-0.69

Correlation Coefficient

Opthea  Janux Therapeutics

Excellent diversification

The 3 months correlation between Opthea and Janux is -0.69. Overlapping area represents the amount of risk that can be diversified away by holding Opthea and Janux Therapeutics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Janux Therapeutics 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 Janux Therapeutics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Janux Therapeutics has no effect on the direction of Opthea i.e., Opthea and Janux Therapeutics go up and down completely randomly.

Pair Corralation between Opthea and Janux Therapeutics

Considering the 90-day investment horizon Opthea is expected to generate 0.95 times more return on investment than Janux Therapeutics. However, Opthea is 1.05 times less risky than Janux Therapeutics. It trades about -0.26 of its potential returns per unit of risk. Janux Therapeutics is currently generating about -0.39 per unit of risk. If you would invest  549.00  in Opthea on December 1, 2024 and sell it today you would lose (101.00) from holding Opthea or give up 18.4% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

Opthea  vs.  Janux Therapeutics

Opthea

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Opthea are ranked lower than 7 (%) 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.

Janux Therapeutics

Risk-Adjusted Performance

Very Weak

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

Pair Trading with Opthea and Janux Therapeutics

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

The idea behind Opthea and Janux Therapeutics 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.