Correlation Between ProMIS Neurosciences and Opthea

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

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

Diversification Opportunities for ProMIS Neurosciences and Opthea

0.42

Correlation Coefficient

ProMIS Neurosciences  Opthea

Very weak diversification

The 3 months correlation between ProMIS and Opthea is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding ProMIS Neurosciences and Opthea in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Opthea and ProMIS Neurosciences 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 ProMIS Neurosciences are associated (or correlated) with Opthea. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Opthea has no effect on the direction of ProMIS Neurosciences i.e., ProMIS Neurosciences and Opthea go up and down completely randomly.

Pair Corralation between ProMIS Neurosciences and Opthea

Considering the 90-day investment horizon ProMIS Neurosciences is expected to under-perform the Opthea. In addition to that, ProMIS Neurosciences is 1.92 times more volatile than Opthea. It trades about -0.01 of its total potential returns per unit of risk. Opthea is currently generating about 0.0 per unit of volatility. If you would invest  557.00  in Opthea on October 22, 2024 and sell it today you would lose (167.50) from holding Opthea or give up 30.07% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	97.98%
Values	Daily Returns

ProMIS Neurosciences  vs.  Opthea

ProMIS Neurosciences

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ProMIS Neurosciences has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy primary indicators, ProMIS Neurosciences is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

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.

Pair Trading with ProMIS Neurosciences and Opthea

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

The idea behind ProMIS Neurosciences and Opthea 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.

Check out your portfolio center.

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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.