Correlation Between Tenaya Therapeutics and Ocular Therapeutix

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

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

Diversification Opportunities for Tenaya Therapeutics and Ocular Therapeutix

-0.16

Correlation Coefficient

Tenaya Therapeutics  Ocular Therapeutix

Good diversification

The 3 months correlation between Tenaya and Ocular is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding Tenaya Therapeutics and Ocular Therapeutix in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ocular Therapeutix and Tenaya 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 Tenaya Therapeutics are associated (or correlated) with Ocular Therapeutix. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ocular Therapeutix has no effect on the direction of Tenaya Therapeutics i.e., Tenaya Therapeutics and Ocular Therapeutix go up and down completely randomly.

Pair Corralation between Tenaya Therapeutics and Ocular Therapeutix

Given the investment horizon of 90 days Tenaya Therapeutics is expected to generate 2.73 times more return on investment than Ocular Therapeutix. However, Tenaya Therapeutics is 2.73 times more volatile than Ocular Therapeutix. It trades about 0.34 of its potential returns per unit of risk. Ocular Therapeutix is currently generating about -0.06 per unit of risk. If you would invest  192.00  in Tenaya Therapeutics on September 1, 2024 and sell it today you would earn a total of  165.00  from holding Tenaya Therapeutics or generate 85.94% return on investment over 90 days.

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

Tenaya Therapeutics  vs.  Ocular Therapeutix

Tenaya Therapeutics

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Tenaya Therapeutics are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite somewhat unsteady basic indicators, Tenaya Therapeutics sustained solid returns over the last few months and may actually be approaching a breakup point.

Ocular Therapeutix

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Ocular Therapeutix are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite quite weak basic indicators, Ocular Therapeutix disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Tenaya Therapeutics and Ocular Therapeutix

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

The idea behind Tenaya Therapeutics and Ocular Therapeutix 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.