Correlation Between OliX PharmaceuticalsI and ABL Bio

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

By analyzing existing cross correlation between OliX PharmaceuticalsInc and ABL Bio, you can compare the effects of market volatilities on OliX PharmaceuticalsI and ABL Bio 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 OliX PharmaceuticalsI with a short position of ABL Bio. Check out your portfolio center. Please also check ongoing floating volatility patterns of OliX PharmaceuticalsI and ABL Bio.

Diversification Opportunities for OliX PharmaceuticalsI and ABL Bio

0.7

Correlation Coefficient

OliX PharmaceuticalsI  ABL Bio

Poor diversification

The 3 months correlation between OliX and ABL is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding OliX PharmaceuticalsInc and ABL Bio in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ABL Bio and OliX PharmaceuticalsI 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 OliX PharmaceuticalsInc are associated (or correlated) with ABL Bio. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ABL Bio has no effect on the direction of OliX PharmaceuticalsI i.e., OliX PharmaceuticalsI and ABL Bio go up and down completely randomly.

Pair Corralation between OliX PharmaceuticalsI and ABL Bio

Assuming the 90 days trading horizon OliX PharmaceuticalsInc is expected to generate 1.58 times more return on investment than ABL Bio. However, OliX PharmaceuticalsI is 1.58 times more volatile than ABL Bio. It trades about 0.1 of its potential returns per unit of risk. ABL Bio is currently generating about -0.05 per unit of risk. If you would invest  1,568,000  in OliX PharmaceuticalsInc on August 31, 2024 and sell it today you would earn a total of  522,000  from holding OliX PharmaceuticalsInc or generate 33.29% return on investment over 90 days.

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

OliX PharmaceuticalsInc  vs.  ABL Bio

OliX PharmaceuticalsInc

Risk-Adjusted Performance

8 of 100

OK

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

ABL Bio

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ABL Bio has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in December 2024. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with OliX PharmaceuticalsI and ABL Bio

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

The idea behind OliX PharmaceuticalsInc and ABL Bio 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.