Correlation Between Exxon and Cocrystal Pharma

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

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

Diversification Opportunities for Exxon and Cocrystal Pharma

-0.59

Correlation Coefficient

Exxon  Cocrystal Pharma

Excellent diversification

The 3 months correlation between Exxon and Cocrystal is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding Exxon Mobil Corp and Cocrystal Pharma in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cocrystal Pharma and Exxon 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 Exxon Mobil Corp are associated (or correlated) with Cocrystal Pharma. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cocrystal Pharma has no effect on the direction of Exxon i.e., Exxon and Cocrystal Pharma go up and down completely randomly.

Pair Corralation between Exxon and Cocrystal Pharma

Considering the 90-day investment horizon Exxon is expected to generate 9.24 times less return on investment than Cocrystal Pharma. But when comparing it to its historical volatility, Exxon Mobil Corp is 3.6 times less risky than Cocrystal Pharma. It trades about 0.01 of its potential returns per unit of risk. Cocrystal Pharma is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  232.00  in Cocrystal Pharma on October 7, 2024 and sell it today you would earn a total of  3.00  from holding Cocrystal Pharma or generate 1.29% return on investment over 90 days.

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

Exxon Mobil Corp  vs.  Cocrystal Pharma

Exxon Mobil Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Exxon Mobil Corp 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 February 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Cocrystal Pharma

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Cocrystal Pharma are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Even with relatively unfluctuating fundamental indicators, Cocrystal Pharma reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Exxon and Cocrystal Pharma

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

The idea behind Exxon Mobil Corp and Cocrystal Pharma 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.