Correlation Between OncoVista Innovative and Xenon Pharmaceuticals

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

By analyzing existing cross correlation between OncoVista Innovative Therapies and Xenon Pharmaceuticals, you can compare the effects of market volatilities on OncoVista Innovative and Xenon Pharmaceuticals 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 OncoVista Innovative with a short position of Xenon Pharmaceuticals. Check out your portfolio center. Please also check ongoing floating volatility patterns of OncoVista Innovative and Xenon Pharmaceuticals.

Diversification Opportunities for OncoVista Innovative and Xenon Pharmaceuticals

0.74

Correlation Coefficient

OncoVista Innovative  Xenon Pharmaceuticals

Poor diversification

The 3 months correlation between OncoVista and Xenon is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding OncoVista Innovative Therapies and Xenon Pharmaceuticals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Xenon Pharmaceuticals and OncoVista Innovative 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 OncoVista Innovative Therapies are associated (or correlated) with Xenon Pharmaceuticals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Xenon Pharmaceuticals has no effect on the direction of OncoVista Innovative i.e., OncoVista Innovative and Xenon Pharmaceuticals go up and down completely randomly.

Pair Corralation between OncoVista Innovative and Xenon Pharmaceuticals

Given the investment horizon of 90 days OncoVista Innovative Therapies is expected to under-perform the Xenon Pharmaceuticals. In addition to that, OncoVista Innovative is 3.15 times more volatile than Xenon Pharmaceuticals. It trades about -0.12 of its total potential returns per unit of risk. Xenon Pharmaceuticals is currently generating about -0.08 per unit of volatility. If you would invest  3,853  in Xenon Pharmaceuticals on December 29, 2024 and sell it today you would lose (407.00) from holding Xenon Pharmaceuticals or give up 10.56% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	95.31%
Values	Daily Returns

OncoVista Innovative Therapies  vs.  Xenon Pharmaceuticals

OncoVista Innovative

Risk-Adjusted Performance

Very Weak

Over the last 90 days OncoVista Innovative Therapies has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of inconsistent performance in the last few months, the Stock's forward indicators remain comparatively stable which may send shares a bit higher in April 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Xenon Pharmaceuticals

Risk-Adjusted Performance

Very Weak

Over the last 90 days Xenon Pharmaceuticals has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest conflicting performance, the Stock's basic indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Pair Trading with OncoVista Innovative and Xenon Pharmaceuticals

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

The idea behind OncoVista Innovative Therapies and Xenon Pharmaceuticals 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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.