Correlation Between Opthea and Precigen

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

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

Diversification Opportunities for Opthea and Precigen

0.65

Correlation Coefficient

Opthea  Precigen

Poor diversification

The 3 months correlation between Opthea and Precigen is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Opthea and Precigen in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Precigen 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 Precigen. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Precigen has no effect on the direction of Opthea i.e., Opthea and Precigen go up and down completely randomly.

Pair Corralation between Opthea and Precigen

Considering the 90-day investment horizon Opthea is expected to generate 230.58 times less return on investment than Precigen. In addition to that, Opthea is 1.12 times more volatile than Precigen. It trades about 0.0 of its total potential returns per unit of risk. Precigen is currently generating about 0.18 per unit of volatility. If you would invest  93.00  in Precigen on December 29, 2024 and sell it today you would earn a total of  71.00  from holding Precigen or generate 76.34% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	86.89%
Values	Daily Returns

Opthea  vs.  Precigen

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.

Precigen

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Precigen are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of very unsteady technical and fundamental indicators, Precigen displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Opthea and Precigen

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

The idea behind Opthea and Precigen 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.