Correlation Between ATAI Life and Opthea

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

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

Diversification Opportunities for ATAI Life and Opthea

-0.7

Correlation Coefficient

ATAI Life  Opthea

Excellent diversification

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

Pair Corralation between ATAI Life and Opthea

Given the investment horizon of 90 days ATAI Life Sciences is expected to generate 1.23 times more return on investment than Opthea. However, ATAI Life is 1.23 times more volatile than Opthea. It trades about 0.05 of its potential returns per unit of risk. Opthea is currently generating about 0.0 per unit of risk. If you would invest  124.00  in ATAI Life Sciences on September 18, 2024 and sell it today you would earn a total of  9.00  from holding ATAI Life Sciences or generate 7.26% return on investment over 90 days.

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

ATAI Life Sciences  vs.  Opthea

ATAI Life Sciences

Risk-Adjusted Performance

3 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in ATAI Life Sciences are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite fairly unsteady basic indicators, ATAI Life demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Opthea

Risk-Adjusted Performance

0 of 100

Weak

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

Pair Trading with ATAI Life and Opthea

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

The idea behind ATAI Life Sciences and Opthea 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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.