Correlation Between Sonnet Biotherapeutics and Onconova Therapeutics

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

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

Diversification Opportunities for Sonnet Biotherapeutics and Onconova Therapeutics

0.31

Correlation Coefficient

Sonnet Biotherapeutics  Onconova Therapeutics

Weak diversification

The 3 months correlation between Sonnet and Onconova is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding Sonnet Biotherapeutics Holding and Onconova Therapeutics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Onconova Therapeutics and Sonnet Biotherapeutics 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 Sonnet Biotherapeutics Holdings are associated (or correlated) with Onconova Therapeutics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Onconova Therapeutics has no effect on the direction of Sonnet Biotherapeutics i.e., Sonnet Biotherapeutics and Onconova Therapeutics go up and down completely randomly.

Pair Corralation between Sonnet Biotherapeutics and Onconova Therapeutics

If you would invest  102.00  in Onconova Therapeutics on August 31, 2024 and sell it today you would earn a total of  0.00  from holding Onconova Therapeutics or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	1.59%
Values	Daily Returns

Sonnet Biotherapeutics Holding  vs.  Onconova Therapeutics

Sonnet Biotherapeutics

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sonnet Biotherapeutics Holdings 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 basic indicators remain very healthy which may send shares a bit higher in December 2024. The recent disarray may also be a sign of long period up-swing for the firm investors.

Onconova Therapeutics

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Onconova Therapeutics has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, Onconova Therapeutics is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Sonnet Biotherapeutics and Onconova Therapeutics

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

The idea behind Sonnet Biotherapeutics Holdings and Onconova Therapeutics 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.