Correlation Between XOMA and Dyadic International

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

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

Diversification Opportunities for XOMA and Dyadic International

-0.15

Correlation Coefficient

XOMA  Dyadic International

Good diversification

The 3 months correlation between XOMA and Dyadic is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding XOMA Corp. and Dyadic International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dyadic International and XOMA 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 XOMA Corporation are associated (or correlated) with Dyadic International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dyadic International has no effect on the direction of XOMA i.e., XOMA and Dyadic International go up and down completely randomly.

Pair Corralation between XOMA and Dyadic International

Assuming the 90 days horizon XOMA is expected to generate 85.01 times less return on investment than Dyadic International. But when comparing it to its historical volatility, XOMA Corporation is 29.13 times less risky than Dyadic International. It trades about 0.08 of its potential returns per unit of risk. Dyadic International is currently generating about 0.24 of returns per unit of risk over similar time horizon. If you would invest  117.00  in Dyadic International on September 17, 2024 and sell it today you would earn a total of  46.00  from holding Dyadic International or generate 39.32% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	95.24%
Values	Daily Returns

XOMA Corp.  vs.  Dyadic International

XOMA

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in XOMA Corporation are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, XOMA is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Dyadic International

Risk-Adjusted Performance

7 of 100

OK

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

Pair Trading with XOMA and Dyadic International

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

The idea behind XOMA Corporation and Dyadic International 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.