Correlation Between Opthea and PsyBio Therapeutics

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

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

Diversification Opportunities for Opthea and PsyBio Therapeutics

0.5

Correlation Coefficient

Opthea  PsyBio Therapeutics

Very weak diversification

The 3 months correlation between Opthea and PsyBio is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding Opthea and PsyBio Therapeutics Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PsyBio Therapeutics Corp 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 PsyBio Therapeutics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PsyBio Therapeutics Corp has no effect on the direction of Opthea i.e., Opthea and PsyBio Therapeutics go up and down completely randomly.

Pair Corralation between Opthea and PsyBio Therapeutics

If you would invest  316.00  in Opthea on September 23, 2024 and sell it today you would earn a total of  18.00  from holding Opthea or generate 5.7% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	95.45%
Values	Daily Returns

Opthea  vs.  PsyBio Therapeutics Corp

Opthea

Risk-Adjusted Performance

0 of 100

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 latest unfluctuating performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

PsyBio Therapeutics Corp

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in PsyBio Therapeutics Corp are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile fundamental drivers, PsyBio Therapeutics reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Opthea and PsyBio Therapeutics

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

The idea behind Opthea and PsyBio Therapeutics Corp 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 Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.