Correlation Between Checkpoint Therapeutics and Oramed Pharmaceuticals

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

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

Diversification Opportunities for Checkpoint Therapeutics and Oramed Pharmaceuticals

-0.06

Correlation Coefficient

Checkpoint Therapeutics  Oramed Pharmaceuticals

Good diversification

The 3 months correlation between Checkpoint and Oramed is -0.06. Overlapping area represents the amount of risk that can be diversified away by holding Checkpoint Therapeutics and Oramed Pharmaceuticals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Oramed Pharmaceuticals and Checkpoint Therapeutics 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 Checkpoint Therapeutics are associated (or correlated) with Oramed Pharmaceuticals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Oramed Pharmaceuticals has no effect on the direction of Checkpoint Therapeutics i.e., Checkpoint Therapeutics and Oramed Pharmaceuticals go up and down completely randomly.

Pair Corralation between Checkpoint Therapeutics and Oramed Pharmaceuticals

Given the investment horizon of 90 days Checkpoint Therapeutics is expected to generate 1.66 times more return on investment than Oramed Pharmaceuticals. However, Checkpoint Therapeutics is 1.66 times more volatile than Oramed Pharmaceuticals. It trades about 0.25 of its potential returns per unit of risk. Oramed Pharmaceuticals is currently generating about 0.04 per unit of risk. If you would invest  219.00  in Checkpoint Therapeutics on September 12, 2024 and sell it today you would earn a total of  179.00  from holding Checkpoint Therapeutics or generate 81.74% return on investment over 90 days.

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

Checkpoint Therapeutics  vs.  Oramed Pharmaceuticals

Checkpoint Therapeutics

Risk-Adjusted Performance

0 of 100

Solid

Over the last 90 days Checkpoint Therapeutics has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively weak basic indicators, Checkpoint Therapeutics unveiled solid returns over the last few months and may actually be approaching a breakup point.

Oramed Pharmaceuticals

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Oramed Pharmaceuticals are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable primary indicators, Oramed Pharmaceuticals is not utilizing all of its potentials. The current stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Checkpoint Therapeutics and Oramed Pharmaceuticals

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

The idea behind Checkpoint Therapeutics and Oramed Pharmaceuticals 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 Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.