Correlation Between Protokinetix and OKYO Pharma

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

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

Diversification Opportunities for Protokinetix and OKYO Pharma

0.12

Correlation Coefficient

Protokinetix  OKYO Pharma

Average diversification

The 3 months correlation between Protokinetix and OKYO is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding Protokinetix and OKYO Pharma Ltd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on OKYO Pharma and Protokinetix 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 Protokinetix are associated (or correlated) with OKYO Pharma. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of OKYO Pharma has no effect on the direction of Protokinetix i.e., Protokinetix and OKYO Pharma go up and down completely randomly.

Pair Corralation between Protokinetix and OKYO Pharma

Given the investment horizon of 90 days Protokinetix is expected to generate 1.54 times more return on investment than OKYO Pharma. However, Protokinetix is 1.54 times more volatile than OKYO Pharma Ltd. It trades about 0.03 of its potential returns per unit of risk. OKYO Pharma Ltd is currently generating about 0.02 per unit of risk. If you would invest  2.95  in Protokinetix on October 10, 2024 and sell it today you would lose (1.95) from holding Protokinetix or give up 66.1% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	99.8%
Values	Daily Returns

Protokinetix  vs.  OKYO Pharma Ltd

Protokinetix

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Protokinetix are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Protokinetix showed solid returns over the last few months and may actually be approaching a breakup point.

OKYO Pharma

Risk-Adjusted Performance

8 of 100

Modest

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

Pair Trading with Protokinetix and OKYO Pharma

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

The idea behind Protokinetix and OKYO Pharma Ltd 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.