Correlation Between Arcus Biosciences and Opthea

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

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

Diversification Opportunities for Arcus Biosciences and Opthea

0.56

Correlation Coefficient

Arcus Biosciences  Opthea

Very weak diversification

The 3 months correlation between Arcus and Opthea is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding Arcus Biosciences and Opthea in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Opthea 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 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 Arcus Biosciences i.e., Arcus Biosciences and Opthea go up and down completely randomly.

Pair Corralation between Arcus Biosciences and Opthea

Given the investment horizon of 90 days Arcus Biosciences is expected to generate 1.17 times less return on investment than Opthea. But when comparing it to its historical volatility, Arcus Biosciences is 1.1 times less risky than Opthea. It trades about 0.01 of its potential returns per unit of risk. Opthea is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  463.00  in Opthea on September 24, 2024 and sell it today you would lose (129.00) from holding Opthea or give up 27.86% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	97.79%
Values	Daily Returns

Arcus Biosciences  vs.  Opthea

Arcus Biosciences

Risk-Adjusted Performance

1 of 100

Very Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Arcus Biosciences are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Arcus Biosciences is not utilizing all of its potentials. The recent stock price uproar, may contribute to short-horizon losses for the private 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 unsteady 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 Arcus Biosciences and Opthea

The main advantage of trading using opposite Arcus Biosciences and Opthea positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Arcus Biosciences 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 Arcus Biosciences 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.

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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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.