Correlation Between Theratechnologies and Oncolytics Biotech

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

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

Diversification Opportunities for Theratechnologies and Oncolytics Biotech

0.34

Correlation Coefficient

Theratechnologies  Oncolytics Biotech

Weak diversification

The 3 months correlation between Theratechnologies and Oncolytics is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding Theratechnologies and Oncolytics Biotech in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Oncolytics Biotech and Theratechnologies 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 Theratechnologies are associated (or correlated) with Oncolytics Biotech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Oncolytics Biotech has no effect on the direction of Theratechnologies i.e., Theratechnologies and Oncolytics Biotech go up and down completely randomly.

Pair Corralation between Theratechnologies and Oncolytics Biotech

Assuming the 90 days horizon Theratechnologies is expected to generate 0.65 times more return on investment than Oncolytics Biotech. However, Theratechnologies is 1.55 times less risky than Oncolytics Biotech. It trades about 0.07 of its potential returns per unit of risk. Oncolytics Biotech is currently generating about 0.01 per unit of risk. If you would invest  164.00  in Theratechnologies on September 5, 2024 and sell it today you would earn a total of  21.00  from holding Theratechnologies or generate 12.8% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.44%
Values	Daily Returns

Theratechnologies  vs.  Oncolytics Biotech

Theratechnologies

Risk-Adjusted Performance

5 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Theratechnologies are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of very abnormal basic indicators, Theratechnologies displayed solid returns over the last few months and may actually be approaching a breakup point.

Oncolytics Biotech

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Theratechnologies and Oncolytics Biotech

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

The idea behind Theratechnologies and Oncolytics Biotech 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.