Correlation Between Phibro Animal and OptiNose

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

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

Diversification Opportunities for Phibro Animal and OptiNose

-0.2

Correlation Coefficient

Phibro Animal  OptiNose

Good diversification

The 3 months correlation between Phibro and OptiNose is -0.2. Overlapping area represents the amount of risk that can be diversified away by holding Phibro Animal Health and OptiNose in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on OptiNose and Phibro Animal 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 Phibro Animal Health are associated (or correlated) with OptiNose. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of OptiNose has no effect on the direction of Phibro Animal i.e., Phibro Animal and OptiNose go up and down completely randomly.

Pair Corralation between Phibro Animal and OptiNose

Given the investment horizon of 90 days Phibro Animal is expected to generate 9.33 times less return on investment than OptiNose. But when comparing it to its historical volatility, Phibro Animal Health is 2.49 times less risky than OptiNose. It trades about 0.03 of its potential returns per unit of risk. OptiNose is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  620.00  in OptiNose on December 29, 2024 and sell it today you would earn a total of  295.00  from holding OptiNose or generate 47.58% return on investment over 90 days.

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

Phibro Animal Health  vs.  OptiNose

Phibro Animal Health

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Phibro Animal Health are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound technical indicators, Phibro Animal is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

OptiNose

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in OptiNose are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of very conflicting basic indicators, OptiNose displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Phibro Animal and OptiNose

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

The idea behind Phibro Animal Health and OptiNose 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.