Correlation Between Xenon Pharmaceuticals and OncoVista Innovative

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

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

Diversification Opportunities for Xenon Pharmaceuticals and OncoVista Innovative

0.74

Correlation Coefficient

Xenon Pharmaceuticals  OncoVista Innovative

Poor diversification

The 3 months correlation between Xenon and OncoVista is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Xenon Pharmaceuticals and OncoVista Innovative Therapies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on OncoVista Innovative and Xenon Pharmaceuticals 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 Xenon Pharmaceuticals are associated (or correlated) with OncoVista Innovative. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of OncoVista Innovative has no effect on the direction of Xenon Pharmaceuticals i.e., Xenon Pharmaceuticals and OncoVista Innovative go up and down completely randomly.

Pair Corralation between Xenon Pharmaceuticals and OncoVista Innovative

Given the investment horizon of 90 days Xenon Pharmaceuticals is expected to generate 0.32 times more return on investment than OncoVista Innovative. However, Xenon Pharmaceuticals is 3.15 times less risky than OncoVista Innovative. It trades about -0.08 of its potential returns per unit of risk. OncoVista Innovative Therapies is currently generating about -0.12 per unit of risk. If you would invest  3,853  in Xenon Pharmaceuticals on December 29, 2024 and sell it today you would lose (407.00) from holding Xenon Pharmaceuticals or give up 10.56% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	95.31%
Values	Daily Returns

Xenon Pharmaceuticals  vs.  OncoVista Innovative Therapies

Xenon Pharmaceuticals

Risk-Adjusted Performance

Very Weak

Over the last 90 days Xenon Pharmaceuticals has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest conflicting performance, the Stock's basic indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

OncoVista Innovative

Risk-Adjusted Performance

Very Weak

Over the last 90 days OncoVista Innovative Therapies has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of inconsistent performance in the last few months, the Stock's forward indicators remain comparatively stable which may send shares a bit higher in April 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Xenon Pharmaceuticals and OncoVista Innovative

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

The idea behind Xenon Pharmaceuticals and OncoVista Innovative Therapies 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.

Check out your portfolio center.

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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.