Correlation Between Arcus Biosciences and OKYO Pharma

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

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

Diversification Opportunities for Arcus Biosciences and OKYO Pharma

-0.34

Correlation Coefficient

Arcus Biosciences  OKYO Pharma

Very good diversification

The 3 months correlation between Arcus and OKYO is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding Arcus Biosciences and OKYO Pharma Ltd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on OKYO Pharma and Arcus Biosciences 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 Arcus Biosciences 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 Arcus Biosciences i.e., Arcus Biosciences and OKYO Pharma go up and down completely randomly.

Pair Corralation between Arcus Biosciences and OKYO Pharma

Given the investment horizon of 90 days Arcus Biosciences is expected to under-perform the OKYO Pharma. But the stock apears to be less risky and, when comparing its historical volatility, Arcus Biosciences is 1.26 times less risky than OKYO Pharma. The stock trades about -0.4 of its potential returns per unit of risk. The OKYO Pharma Ltd is currently generating about 0.28 of returns per unit of risk over similar time horizon. If you would invest  107.00  in OKYO Pharma Ltd on October 12, 2024 and sell it today you would earn a total of  22.00  from holding OKYO Pharma Ltd or generate 20.56% return on investment over 90 days.

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

Arcus Biosciences  vs.  OKYO Pharma Ltd

Arcus Biosciences

Risk-Adjusted Performance

0 of 100

Very Weak

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

OKYO Pharma

Risk-Adjusted Performance

5 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in OKYO Pharma Ltd are ranked lower than 5 (%) 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 Arcus Biosciences and OKYO Pharma

The main advantage of trading using opposite Arcus Biosciences and OKYO Pharma positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Arcus Biosciences 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 Arcus Biosciences 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.