Correlation Between Protagenic Therapeutics and Opthea

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

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

Diversification Opportunities for Protagenic Therapeutics and Opthea

-0.55

Correlation Coefficient

Protagenic Therapeutics  Opthea

Excellent diversification

The 3 months correlation between Protagenic and Opthea is -0.55. Overlapping area represents the amount of risk that can be diversified away by holding Protagenic Therapeutics and Opthea in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Opthea and Protagenic Therapeutics 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 Protagenic Therapeutics 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 Protagenic Therapeutics i.e., Protagenic Therapeutics and Opthea go up and down completely randomly.

Pair Corralation between Protagenic Therapeutics and Opthea

Given the investment horizon of 90 days Protagenic Therapeutics is expected to under-perform the Opthea. In addition to that, Protagenic Therapeutics is 1.3 times more volatile than Opthea. It trades about -0.1 of its total potential returns per unit of risk. Opthea is currently generating about 0.0 per unit of volatility. If you would invest  387.00  in Opthea on December 29, 2024 and sell it today you would lose (46.00) from holding Opthea or give up 11.89% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	86.89%
Values	Daily Returns

Protagenic Therapeutics  vs.  Opthea

Protagenic Therapeutics

Risk-Adjusted Performance

Very Weak

Over the last 90 days Protagenic Therapeutics has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's forward indicators remain fairly strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Opthea

Risk-Adjusted Performance

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 comparatively stable basic indicators, Opthea is not utilizing all of its potentials. The recent stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Protagenic Therapeutics and Opthea

The main advantage of trading using opposite Protagenic Therapeutics and Opthea positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Protagenic Therapeutics 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 Protagenic Therapeutics 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.