Correlation Between Verona Pharma and Oncternal Therapeutics

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

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

Diversification Opportunities for Verona Pharma and Oncternal Therapeutics

0.0

Correlation Coefficient

Verona Pharma  Oncternal Therapeutics

Pay attention - limited upside

The 3 months correlation between Verona and Oncternal is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Verona Pharma PLC and Oncternal Therapeutics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Oncternal Therapeutics and Verona Pharma 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 Verona Pharma PLC are associated (or correlated) with Oncternal Therapeutics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Oncternal Therapeutics has no effect on the direction of Verona Pharma i.e., Verona Pharma and Oncternal Therapeutics go up and down completely randomly.

Pair Corralation between Verona Pharma and Oncternal Therapeutics

If you would invest  4,702  in Verona Pharma PLC on December 29, 2024 and sell it today you would earn a total of  1,568  from holding Verona Pharma PLC or generate 33.35% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Verona Pharma PLC  vs.  Oncternal Therapeutics

Verona Pharma PLC

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Verona Pharma PLC are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Verona Pharma sustained solid returns over the last few months and may actually be approaching a breakup point.

Oncternal Therapeutics

Risk-Adjusted Performance

Very Weak

Over the last 90 days Oncternal Therapeutics has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable fundamental indicators, Oncternal Therapeutics is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Verona Pharma and Oncternal Therapeutics

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

The idea behind Verona Pharma PLC and Oncternal 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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.